Enlarged Stars Group focuses on debt reduction despite Flutter movements

Enlarged Stars Group focuses on debt reduction despite Flutter movements

Toronto TSX-listed The Stars Group Inc, underlines its corporate focus of integrating its new international sportsbook assets and reducing its debt load, publishing its Q3 2019 trading update (period ending 30 September).

Incorporating the assets of Sky Bet (UK) and its newly formed Australia division merging Crownbet and William Hill AUS, the Stars Inc records an 8% increase in Q3 2019 group revenues to $622 million (Q32018: $571m).

“Our third-quarter results were robust and in-line with our expectations, supported by strong revenue growth in our United Kingdom and Australia segments, which helped offset both the ongoing disruption in certain of our lower-priority international markets and continued foreign exchange headwinds across the business,” said Rafi Ashkenazi, The Stars Group’s Chief Executive Officer.

A breakdown of segments sees the Stars Group’s flagship PokerStars division continue to flounder recording period revenues of $325 million (Q32018: $352 million), impacted by local restrictions on payment methods and market closures in jurisdictions such as Switzerland (July 2019).

A tough trading period for PokerStars facing multiple market headwinds combined with currency impacts sees the division’s operating income reduced by 35% to $88 million (Q32018: $135m).

Diversifying its assets, the Stars Group points to Sky Bet as the firm’s standout performer, noting that its UK venture has maintained its commercial momentum despite acquisition disruptions.

Detailing double-digit growth across its betting (+52%) and gaming (+16%) verticals, Sky Bet records period revenues of $226 million (Q32018: $168m).

Driven by strong customer activity, improved retention and cross-sell efficiencies, Sky Bet delivers a positive period operating income of $15 million (Q32018: -$28million).

However, incorporating its new assets, Stars Group reports increased general and administrative period operating costs of $335 million (Q3 2018: $267m), as the TSX firm declares period net losses of $52 million.

Updating investors, CEO Rafi Ashkenazi and Stars Group governance underline debt reduction as a core directive leading the group’s enlarged operations, which at present sees the company’s long term principal debt stand at $5.1 billion.

“Our highly cash generative business model also enabled us to reduce our net debt by over $100 million in the quarter and prepay yet another $100 million in October, bringing our total prepayments since the beginning of the year to over $450 million and around $600 million since July 2018,” added CEO Rafi Ashkenazi.

“Ahead of closing, we remain highly focused on our key strategic priorities of integration, execution and debt reduction. Not only have we largely completed the integration of Sky Betting & Gaming, but we currently expect to exit 2019 with a run-rate of the full $100 million of expected cost synergies and are beginning to execute on our plans for revenue upside through Sky Bet in Italy and Germany and our developing U.K. ecosystem,” concludes Ashkenazi.


Source: SBC News