Entain ups EBITDA guidance as UK growth remains stunted

Entain Plc has upgraded its full-year 2024 guidance due to stronger-than-expected Q2 results and revised regulatory timings helping the execution of key upgrades.

Posting its H1 trading statement, the FTSE100 gambling group underscored its ‘improved operational execution’ ahead of Gavin Isaacs beginning his tenure as new CEO on 2 September 2024.

Corporate results, including the performance of joint-venture BetMGM, saw Entain declare a 6% increase in H1 net gaming revenues (NGR); however, total H1 NGR indexed at 0% on a constant currency pro-forma basis.

In July, the BetMGM JV had previously posted its interim results declaring an H1 NGR of $1bn, up 6% on 2023 comparatives.

A financial summary was provided for Entain ‘excluding US activities,’ which reported group NGR up 6% at £2.55bn (H1 2023: £2.40bn).

Gross profits from operations (excluding US) amounted to £1.53bn (+5%) as Entain’s H1 underlying EBITDA stood at £524m, up 5% on 2023 comparatives of £499m – reflecting “Q2 gains and stronger-than-expected win margins during Euros trading”.

Positive H1 underlying group results saw Entain leadership upgrade its full-year EBITDA guidance, expected to be in the range of £1,040m-£1,090m.

Interim CEO Stella David noted: “Entain’s H1 results are clear evidence that our hard work improving the Group’s operational performance is bearing fruit. While there is more work to do, we are pleased with the progress so far and look forward to building further on these solid foundations in H2 and beyond.”

Financial declines across all UK metrics

A breakdown of segments (excluding US) revealed the continued commercial slowdown of its UK & Ireland business, which reported declines across all financial metrics (see below accounts).

H1 accounts saw UK & Ireland NGR down 6% to £1.04bn (H1 2023: £1.07bn) as Entain brands continue to adjust to regulatory procedures on customers with Online NGR down 5% to £466m and Retail NGR down 5% to £537m.

Underlying EBITDA from UK & Ireland stands at £199m (-18%) with profits tracking at £123m – 28% below H1 2023 comparatives of £172m.

 

Interim performance was buoyed by positive International unit results, which registered a 7% increase in NGR to £1.3bn (H1 2023: £1.23bn).

The International segment achieved peak online NGR of £1.16bn, attributed to growth in Brazil (+28%) and in the Baltic markets (+8%), offsetting softer customer-friendly results in Italy and Australia.

Entain underscored the growth in the International unit, achieving an underlying EBITDA contribution of £301m (+11%), combined with H1 profits tracking at £210m.

Entain welcomes CEE unit 

As noted, H1 accounts provided the first individual breakdown of Entain CEE results – in which Poland and Croatia businesses contributed NGR of £241m (+126%).

The combination of SuperSport and STS Group brands saw Entain declare a 61% increase in CEE underlying EBITDA to £85m (H1 2023: £51m) with operating profits indexing at £76m.

Entain’s new CEE unit booked an operating loss of £10m, attributed to period trading accounting for £85m in separately disclosed items.

The FTSE group indexed separate disclosed items before tax totalling £276m, down from £735m in 2023.
Disclosed items included £148m of amortisation costs of acquired assets, a £22m booked impairment for its New Zealand business, alongside £51m of a non-cash issue cost write-off due to refinancing.

Additional costs were incurred for discount unwind on DPA settlement liability, restructuring, legal and onerous contracts, and revaluation of contingent consideration, indexed as legal fees of £6m as group accounts reported a loss after tax of £47m.

Entain’s financial restructuring and strategic execution are expected to bring significant improvements in H2. The company’s focus on international markets and strategic joint ventures like BetMGM is likely to drive future growth, despite regulatory challenges in the UK and Ireland.

Newly appointed CEO Gavin Isaacs is set to lead Entain from 2 September 2024 as Interim CEO Stella David concluded: “Our focused execution underpins the Group’s performance so far this year, and we are excited by the opportunities ahead. I look forward to welcoming Gavin Isaacs as our new Chief Executive Officer and supporting him as we continue to build on the Group’s improving operational momentum.”