Tabcorp share price tumbles 13% on half-yearly earnings loss

The wagering and gaming company has hit a new 52-week low.

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The Tabcorp Holdings Ltd (ASX: TAH) share price is down 13.1% to 63 cents following the release of the ASX betting company's 1H FY24 results.

This is a new 52-week low for the company.

Let's look into the earnings report.

Tabcorp share price dives to new 52-week low

Key metrics for the six months ending 31 December 2023:

  • Group statutory net loss after tax of $636.8 million
  • Group revenue of $1,210 million, down 5% on 1H FY23
  • Increased variable contribution (VC) margin of 40.1%, up from 39.2% in 1H FY23
  • Group EBITDA of $170 million, down 14% on 1H FY23
  • Non-cash impairment charge of $731.9 million after tax to the wagering and media business
  • Interim dividend of 1 cent per share, fully franked, payable 21 March

Tabcorp said the dividend represented a payout ratio of 111% and reflected "confidence in the business and a strong financial position".

What else happened in 1H FY24?

A highlight of the half was the Victorian Government awarding Tabcorp the new 20-year Victorian Wagering and Betting Licence.

The company said the licence was a "game-changer" because it levelled the playing field in Victoria on taxes and fees and would generate a step-change in earnings.

Investors loved the news and pushed the Tabcorp share price 22% higher on the day of the announcement in December.

What did Tabcorp management say?

Managing director and CEO Adam Rytenskild said Tabcorp's transformation was on track.

TAB's improving market share trend highlights this, and the broader operational result demonstrates the substantial progress we have made as a company.

Total market share and digital market share grew compared to the prior half. This is another positive step having stopped the decline.

We are seeing positive signs from targeted investment in product, brand, data, technology and retail as we start to leverage the strength of an extensive integrated wagering and media network throughout the country.

Rytenskild noted that had the Victorian licence been in place during FY23, EBITDA would have been $140 million higher on a pro forma basis.

What's next for Tabcorp?

Rytenskild said investments in AI, data and new technology platforms enabled Tabcorp to become a more digital-oriented business.

Combined with our TAB brand embedded in over 4,000 venues, we see a significant omni-channel opportunity that we are yet to capitalise on.

The Australian wagering market is healthy, we're confident it will return to growth and Tabcorp's position in it will be much stronger when it does.

Tabcorp share price snapshot

The Tabcorp share price has dropped by 37% over the past 12 months, while the ASX 200 has risen 4%.

Motley Fool contributor Bronwyn Allen has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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