Shares of Rank Group fall after Mecca owner Bingo issues second three-month earnings warning on weak UK recovery
- This year Rank expects to publish around £ 40 million in LFL’s main operating profit
- Shares of Rank Group fell 16.9% to 82.4 points after the close of trading on Monday
- The firm also blamed rising pressure on spending for declining profits
On Monday, shares of parent company Mecca Bingo fell after the group again lowered its annual earnings forecast after weak trading in its locations in the UK.
Stock Rank Group after the close of trading on Monday fell 16.9 percent to 82.4 pence, making it the worst fall among all listed companies in London, ahead of troubled gold producer Petropavlovsk.
The Maidenhead-based gambling company told investors that while its Grosvenor Casinos division had seen performance improvements since April, it was “much weaker than expected”.
Slow recovery: Rank Group said that while its Grosvenor Casinos division had seen performance improvements since April, it was “much weaker than expected”
This was primarily blamed on the lack of more costs for foreign tourists visiting these establishments, as well as a weaker number of visitors across the UK and a “poorer-than-average” casino winning margin this quarter.
Due to cost pressures, he now expects major operating income of around £ 40 million for the current financial year, previously in April he expected it to be between £ 47 million and £ 55 million.
This latest forecast in itself has been lowered from £ 58 million to £ 65 million, which was made back in January when the interim results were published.
However, Rank expects a rebound to profit after losing up to £ 67 million last year when restrictions related to Covid forced the group to temporarily close its venues for most of the trading period.
As these outlets were responsible for about 80 per cent of total trade, net gaming revenue fell by £ 300 million, with about two-thirds of the fall coming from falling sales at Grosvenor Casino.
In the midst of the UK blockade, the company said it was losing £ 15 million a month, even taking into account the financial support it was receiving, such as easing business rates and a scheme to save jobs in the coronavirus.
Closure: Mecca owner Bingo expects to make a profit after losing up to £ 67 million last year when blocking restrictions forced him to temporarily close the venue
After easing trade restrictions, trade bounced sharply, especially in coastal cities such as Blackpool and Bournemouth, as long-term restrictions on cross-border travel have prompted more Britons to take time off.
In the first three months of 2022, Rank’s revenue was £ 156.4 million, up 221 per cent from the previous year, when its UK outlets were closed for the entire period and its Spanish sites operated under strict capacity limits.
Since then, the leisure company has said that trading in various transactions, which additionally include the Spanish gaming sites Enracha and YoBingo, “generally met management’s expectations”, with the exception of Grosvenor Casino.
In the coming fiscal year, Shore Capital analyst Greg Johnson believes that “the main challenge will be to return international customers with higher costs over the summer, and now we see growth from July.”
He suggested that part of this rebound in trade would be due to the fact that the United Arab Emirates will soon end a 40-day mourning after the death of its late president and former Abu Dhabi leader Sheikh Khalifa bin Zayed Al Nahyan.
Shore Capital lowered its pre-tax earnings forecast for Rank by £ 8 million next year, but the financial services business has maintained its recommendation to investors to buy shares of the group.
Rank Group lowers its earnings forecast for the second time in three months
Source link Rank Group lowers its earnings forecast for the second time in three months