Shares in Tabcorp Holdings Limited (ASX: TAH) are off to a flier with the "fitter" company delivering full-year results that pleased the market.
Tabcorp stock was trading more than 23% higher early in the day at 87.5 cents, after the company reported a net profit before significant items of $49.5 million, up 76.8%.
Group revenue came in at $2.61 billion, up 11.8%, while strong cost discipline led to a fall in underlying operational expenditure of 2.4%, delivering savings of $39 million in FY25, beating the target of $30 million.
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Tabcorp in fine form
Managing director Gillon McLachlan said "the pleasing results are the outcome of creating a fitter company".
"We have increased our wagering and media capability at the leadership level, developed a simpler, more cost-effective operating model and are operating with a bias for action and increased accountability," he said.
"We have an evolved strategy with a broader focus on unlocking the value that lies within our unique asset base.
"We have commenced executing the strategy, including the creation of a structurally profitable retail business that will in time increase patronage to pubs and clubs with a true omnichannel offering.
"The improvement in earnings also reflects our refreshed customer offering as we activate unique offers such as the TAB Takeover and TAB Time that bring to life our omnichannel assets, and the seamless commencement of the new Victorian Licence, which is delivering earnings in line with expectations given soft trading conditions."
Digital to drive future growth
Mr McLachlan said the company was now "digitally competitive" and would focus on creating the ultimate sports and racing entertainment experience going forward.
"You will continue to see greater integration between all of our assets," he said.
"We will continue to increase our focus on tote and tote innovation. A national tote remains a key goal and we will be working collaboratively with industry to try to achieve this."
Mr McLachlan said when he joined the company, he was drawn to the fact that improvements could be made.
"Today we are a fitter business," he said.
"A business with an improved cadence, a simpler, more cost effective operating model and an improved culture of cost and capital discipline.
"We have a clear strategy and clear lines of accountability that are allowing us to execute on a bolder strategic plan."
Jarden analysts have an overweight recommendation on the stock, with a target price of 75 cents.
They said the company had delivered a "strong cost-led operational result, amid flat to down wagering markets".
Tabcorp will pay an unfranked dividend of 1 cent per share on September 19 to shareholders registered on September 1.
