BREXIT sees Davy downbeat on industry growth forecasts

sadtraderFinancial advisory group Davy has lowered sector-wide growth forecasts for UK-listed gambling operators as a result of BREXIT.

The ‘Leave’ outcome has forced Davy to review the current positions of listed gambling operators as the UK economy faces months of fiscal and legal uncertainty.   

Issuing a market note, Davy analysts detailed that UK legacy operators with both large retail and online assets would likely see downward adjustments for full-year 2017 performance.

Davy has revised the following decreased earnings forecasts for FTSE-listed betting operators; Paddy Power Betfair (PPB), Ladbrokes and William Hill for 2017

  • PPB forecasted at 4.4% decrease to £466 million EBITDA
  • Ladbrokes EBIT adjustment of £18.7 million to £92 million (17% earnings decrease)
  • William Hill £37 million EBITDA adjustment to £271 million (12% earnings decrease)

An industry that has witnessed multi-billion £ consolidation and M&A activity in the past 18 months, UK operators will likely be forced to make operational readjustments in the wake of BREXIT as nearly all economic forecasts predict the UK entering a recession.  

The BREXIT result, which the UK government has stated ‘must be followed through’, will be an additional headache to gambling executives, following a tough start to 2016 which saw bookmakers ‘wiped-out’ at Cheltenham and having to further contend with a set of unfavourable sporting results.  

This week, industry stakeholders have urged for further clarity regarding the legal position of Gibraltar as a European gambling jurisdiction. The British Overseas Territory which voted 94% in favour of ‘Remain’ has become the operational hub for 30 gambling operators including listed operators; Ladbrokes, 32Red, 888 Holdings and William Hill.

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