Entain PLC (LON:ENT)’s net gaming revenue (NGR) rose 11% at constant currency to £1.8bn, as strong growth in online gaming offset weakness in retail, due to Covid-related shop closures.
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Underlying profits fell 12% to £205.6m, as a good result in the core business was offset by a £78.2m loss related to Entain’s stake in BetMGM. Underlying cash profits rose 12% to £401.5m, with guidance for the full year unchanged at between £850m and £900m. The board did not propose an interim dividend, but expects to be in a position to start paying dividends again in March 2022 assuming pandemic related restrictions continue to ease.
The shares were broadly unchanged following the announcement.
Entain’s Shift To Digital Was A Becon Of Light
Laura Hoy, Equity Analyst at Hargreaves Lansdown:
“The return of sports has been a welcome relief for Entain. The group’s focus on digital was a beacon of light in an otherwise gloomy year, but without sports betting in the mix enticing players was a challenge. The group’s high street shops have suffered as the majority of its estate was shuttered for most of the half, but players were happy to shift online which helped offset covid-related weakness.
Aside from covid, Entain faced regulatory challenges in Germany which weighed on overall performance slightly. Germany is only one of the group’s markets, so it isn’t a deal-breaker. But it does shine a light on some of the challenges Entain faces as it expands. The regulatory environment is tough, and differing regulations in each market make it more difficult to operate.
Entain’s been laser focused on growth over the past year—investing in its US joint-venture BetMGM and making a handful of acquisitions. We were pleased to see those starting to pay off—Enlabs and Bet.pt contributed 2% to overall online net gaming revenue. BetMGM is also gaining momentum, adding 10 new jurisdictions to its umbrella since the start of 2020.
Ultimately the results from Entain took a positive tone, but easier comparisons from 2020 when sports were on hold added wind to Entain’s sails. The group looks to be on solid footing, but as the stock is currently priced to perfection, we’ll need more evidence to be fully convinced.”
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