Entain executives stress shareholder focus amid share price slump
Entain's chief executive and chief financial officer used a Q3 investor call to defend cost discipline and cash generation as the operator faces a 42% year-to-date fall in its share price.
Entain reported a 2% rise in net gaming revenue for the third quarter, with growth driven by its online operations in the UK and Ireland, according to results released last Thursday and discussed on an investor call covered by SBC News.
Chief Financial Officer Michael Snape told investors the business has "an absolute laser focus" on shareholder value, but ruled out a near-term share buyback or a headline cost-cutting programme.
"Managing our costs, optimising the cost base is the way that we're running the business. It's not a discrete project, it is something that we think about and do every day," Snape said.
He pointed to recent headcount reductions as an example of the kind of incremental action the group would continue to take, rather than announcing a single large-scale initiative.
"We are focused on controlling what we can control while strengthening the foundations of the business," Snape said, adding that the priorities remain to optimise the cost base, improve cash generation and strengthen the balance sheet.
The emphasis on returns comes as Entain has been relegated from the FTSE 100 to the FTSE 250 in recent weeks, with its share price down 42% year-to-date on the London Stock Exchange.
Chief Executive Officer Stella David addressed competitive pressure in the UK, the group's strongest market in the quarter, pointing to rising investment by illegal operators seeking to attract customers.
"There's a lot of activity by black market operators increasing their investment behind advertising and trying to secure players, which is as expected, and that's not going to go away," David said, adding that Entain's strategy is to remain the preferred operator through its Ladbrokes and Coral brands both online and on the high street.
David also referred to the prospect of a higher Machine Games Duty, a live issue in UK gambling policy after the Betting and Gaming Council sent a letter, which she co-signed alongside other tier-one bookmakers, urging Chancellor John Healey not to add further pressure on the sector.
She told investors the potential increase "threatens the viability of many of our shops, with significant consequences to jobs, local communities, the UK high street, as well as the racing industry more widely", while stressing that Entain "must also remain focused on delivering what is in our control".
Brazil featured heavily in the discussion following the removal of the country's Bets Law on 26 September, which curtailed Entain's Sportingbet operations there. Online NGR in the market fell 36%, dragging the group's overall online NGR growth down from what would otherwise have been 5% to 3%, a result the company attributed to prioritising the right customers over chasing volume.
David said she expects a regulated Brazilian market to return in some form and that Entain intends to re-enter once the framework is confirmed. "Our intention is to reopen up Brazil, but while seeing what the framework looks like when it eventually happens, and making sure that we're doing it with the appropriate level of investment to be what I call proportionate and sensible," she said.
Austria was also raised as a market in transition, with the country overhauling its gambling act to replace its historic online monopoly with a multi-licensing system. Entain operates there through its bwin brand under a sports betting licence, and one proposal under consideration would require foreign and grey market operators to observe a mandatory cooling-off period before applying for an Austrian licence.