Ladbrokes owner GVC cuts estimate for coronavirus profit damage

(Reuters) - Ladbrokes and bwin owner GVC <GVC.L> halved its estimate on Monday for a monthly hit to profits from the coronavirus-driven shutdown in international sports, sending shares in the company nearly 9% higher.

GVC, which previously estimated it would lose 100 million pounds monthly in core profit (EBITDA), said it had managed to reduce that figure to 50 million pounds, and still hoped to find more savings.

The gambling industry on the one hand is seeing a bump in online gaming by people stuck at home under lockdowns, but has seen its big cash cow - sportsbetting - hammered by a shutdown in sports activity that may last months.

GVC said that the cancellation of sports events and closure of retail outlets had "significantly" reduced its revenue from mid-March. However, in the first quarter of 2020, its net gaming revenue inched 1% higher, with online growing 19%.

Shares of the London-listed firm, which have fallen more than 40% so far this year, were up as much as 8.8%.

"While our global and product diversification is standing us in good stead during the current uncertainty, the COVID-19 pandemic is posing an unprecedented challenge to our business," Chief Executive Officer Kenneth Alexander said.

The company, like dozens of other European listed companies in the past month, also said it was withdrawing its interim dividend to conserve cash.

With accessible cash of over 350 million pounds at the end of last month, GVC said after implementing cost cuts and capital reductions, its average cash outflow would be 15 million pounds per month.

"Overall, the trading update reinforces our confidence that GVC has the liquidity to comfortably operate through the current suspension of sports and is well placed to benefit when the industry returns to normality," analysts at Berenberg said.

(Reporting by Yadarisa Shabong in Bengaluru, Editing by Sherry Jacob-Phillips and Patrick Graham)