Entain Reports Mixed 2024 Results Amid Regulatory Challenges
Why we think this is neutral
Entain's 2024 results present a mixed picture. While the company achieved revenue growth and improved cash generation, it faces significant challenges. The 8% increase in underlying EBITDA to £1,088.8m is positive, but this is offset by a 4% decline in underlying operating profit. The company's net loss, although improved from 2023, remains substantial at £357.4m. Regulatory headwinds in key markets like the Netherlands and Belgium, along with impairment charges of £476.4m, are concerning. However, the company's strong customer growth, particularly in the UK and Ireland, and its expectation of mid-single-digit percent growth in Online NGR for 2025 provide some optimism. The stable Online EBITDA margin of 25.3% and the company's comfortable liquidity position with over £1bn in available cash are reassuring. Yet, the ongoing AUSTRAC proceedings in Australia and the Greek tax appeal present significant risks. While Entain appears to be navigating challenges and showing resilience in some areas, the overall picture suggests a cautious outlook given the mix of positive growth indicators and substantial regulatory and financial hurdles.
Key Points
- Total Group NGR up 6% (9% cc) to £5,161.9m
- Underlying EBITDA increased 8% to £1,088.8m
- Underlying operating profit down 4% to £616.6m
- Loss before tax of £357.4m, improved from £842.6m loss in 2023
- Online NGR up 9%, Retail NGR up 2%
- Active customers up 10% proforma
- Online EBITDA margin of 25.3%, ahead of expectations
- Impairment charges of £476.4m recognized
- Net debt slightly increased to £3,042.3m
- Available cash over £1bn at year-end
- Expects mid-single-digit percent growth in Online NGR for 2025
- Ongoing AUSTRAC proceedings in Australia and Greek tax appeal present significant risks
Summary
Entain plc reported mixed results for FY2024, highlighting both growth and challenges. Total Group NGR increased by 6% (9% cc) to £5,161.9m, with Online NGR up 9% and Retail NGR up 2%. The company saw underlying EBITDA grow by 8% to £1,088.8m, ahead of expectations. However, underlying operating profit decreased by 4% to £616.6m, and the company reported a loss before tax of £357.4m, albeit an improvement from the previous year's £842.6m loss. Entain faced significant headwinds, including £476.4m in impairment charges and ongoing regulatory challenges in key markets. Despite these challenges, the company maintained a stable Online EBITDA margin of 25.3% and reported strong customer growth, with active customers up 10% proforma. Looking ahead, Entain expects mid-single-digit percent growth in Online NGR for 2025 and is comfortable with market expectations for FY2025. The company's liquidity remains strong with over £1bn in available cash. However, ongoing legal proceedings, including AUSTRAC proceedings in Australia and a Greek tax appeal, present significant risks. Broker targets suggest a mixed outlook, with price targets ranging from 673.20p to 1,140.00p, indicating potential upside from the current share price of 742.20p.