GVC Reports Record Earnings in 2017 But Shareholders Shrug
The figures show that 2017 was a banner year for corporation, with earnings rising to an incredible $1.2 billion, an 18% year over year increase.
The figures show that 2017 was a banner year for corporation, with earnings rising to an incredible $1.2 billion, an 18% year over year increase. In the fourth quarter alone, the company hauled in about $300m in profits, itself a 31% increase from 2016’s total.
“I’m delighted to report another strong year for the Group with underlying NGR growth of 18%, reflecting the strength of our brands, technology and the hard work of our talented people,” said CEO Kenneth Alexander in a statement posted to the company’s website.
Huge Expenditures Drive Increase
The size of GVC has exploded in just the last few years. Company executives have settled on a strategy of aggressive mergers and acquisitions in order to snatch up as much market share as possible.
One of their key moves was the recent acquisition of Ladbrokes Coral. Although the final purchase price is still waiting to be agreed to, it’s estimated that deal will be worth more than $5b. If/once it goes through, it will make GVC one of the largest online casino companies in the world.
“We have once again demonstrated our ability to integrate significant acquisitions, realise material synergies and at the same time deliver top line growth,” Alexander said in the statement. “The recommended transaction with Ladbrokes Coral Group presents an exciting opportunity for both sets of shareholders, creating a global gaming group with a portfolio of strong brands across all major regulated online markets, together with proprietary technology and proven management.”
Stock Price Remains Static; Investors Unimpressed
Normally, a publicly traded company that reports such strong results can expect to see itself handsomely rewarded with a stock price bump. However, that was not the case here.
Analysts believe the reason is a lot of that value comes from fixed-odds-betting terminals which British lawmakers are threatening to clamp down on. That uncertainty has led to the purchase price being contingent upon how regulatory concerns ultimately shake out — something that has investors worried that the company might ultimately end up overpaying.
The huge amount of debt, combined with concerns about the valuation of Ladbrokes, is currently winning the debate – despite the huge revenues, investor enthusiasm about the future currently remains muted.