The Tabcorp Holdings Ltd (ASX: TAH) share price is tanking on Wednesday after the company posted its FY24 results.
Tabcorp shares are down 11% to 50 cents per share at the time of writing as investors digest the company's numbers.
Let's see what the company posted.
Tabcorp share price plummets as FY24 disappoints
The key takeouts from Tabcorp's year include:
- Group Revenue was down 3.9% year over year to $2.34 billion
- Earnings before interest, tax, depreciation and amortisation (EBITDA) fell 18.7% to $317.7 million
- Statutory net loss of $1.36 billion, driven by non-cash impairment charges totalling $1.38 billion after tax
- Declared a dividend of 0.3 cents per share, unfranked, a 43.5% decrease from FY23
What else happened in FY24?
The Tabcorp share price had a difficult time in FY24, and so did the business. Sales, operating profit and net profit were all down substantially.
Net profit before significant items was $28 million, down 67% from the previous year. Including a $1.4 billion non-cash impairment related to its wagering assets, the reported loss was $1.35 billion.
Declines were observed in both of the company's segments, with wagering and media sales down 3% year over year and gaming services down 14%.
It wasn't all doom and gloom though. The company secured a new 20-year Victorian Wagering and Betting Licence, which it expects will enhance competitiveness in the state.
Additionally, Tabcorp made progress in upgrading its retail venues, with 31 locations refurbished across Queensland, Victoria, and NSW. These venues have shown a 19% increase in average turnover compared to non-upgraded venues.
However, these positive developments were overshadowed by the company's struggles in the digital space, with digital wagering revenue down 2.2% for the year.
As a result of the profit declines, the Board tightened the dividend by more than 43%, with a final payout of 0.3 cents per share. This could impact the Tabcorp share price.
What did management say?
Tabcorp's incoming CEO, Gillon McLachlan, acknowledged the challenging year but remained optimistic about the company's future:
Tabcorp has a unique asset base which can ultimately create a complete sports entertainment experience for our customers and unlock value for shareholders. The challenge of connecting those assets to continue executing on the opportunities they present is what I find appealing about the opportunity for the Company going forward.
The Company has done a good job at building solid foundations since demerger and there is no doubt TAB is competing better in the market. The product is better, speed to market has improved, the retail offering is being revitalised and we're achieving structural reforms that will make the company more competitive.
What's next?
Looking ahead, Tabcorp expects the macroeconomic environment to remain challenging, with persistent inflation and high interest rates hitting its target market. This could impact the Tabcorp share price.
The company's new Victorian licence is anticipated to provide a boost to group earnings, adding a potential $115 million in EBITDA on a pro forma basis.
But Tabcorp also faces ongoing cost pressures. CEO McLachlan laid out the bare bones:
It is clear the business will not meet its TAB25 targets. It is my job to unlock an enhanced cadence with a focus on people and capability. As we evolve, we'll be better placed to continue executing on the growth opportunities.
Today's results demonstrate a competitive performance in the soft market conditions we face. It shows customers are responding to the improved product offering and there's no doubt the business is more competitive today than it was at demerger, but it's not where it ultimately needs to be. It will require change but the goal remains unchanged.
Tabcorp share price snapshot
The Tabcorp share price is being heavily sold on Wednesday after the company's FY24 results and challenging outlook.
In the past 12 months, the stock is down 48%.
