Yahoo Finance FTSE: Rank Group share price falls 10% on £34m energy bill
Rank Group (RNK.L), the owner of Mecca Bingo, saw its shares fall as much as 10% on Thursday after it admitted its energy bill is expected to rise to £34m ($38m) for the current year.
The bingo hall and casino firm said costs have continued to soar, with its new energy forecast up from the £23m bill last year.
It is also under pressure from wage inflation, higher food costs and supply chains, its said.
The company now expects “challenging” conditions to continue in the months ahead, after already recording weaker customer spending at its casinos amid a sharp cost of living crisis.
It posted a 2% rise in group like-for-like revenues to £165.7m over the three months to 30 September, boosted by 2% growth in its bingo business and 13% digital growth.
Although London casinos saw a 21% jump in revenues during the period, and takings in its Spanish operations showed much stronger gains, it was not enough to offset the decline elsewhere.
Its Grosvenor casino venues saw a 5% fall in revenues thanks to lower spending per customer visit as people tighten their purse strings.
Rank told shareholders on Thursday that it expects customers’ discretionary spending “to remain under significant pressure this year” despite the impact of energy bill support for UK households.
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“Whilst it is a challenging trading environment and we expect this to continue in the months ahead, we remain committed to delivering Rank’s market leading, exciting and entertaining proposition to our customers, John O’Reilly, chief executive of Rank, said.
“The group has a number of key initiatives under way to improve long-term revenues. These include some key refurbishment projects and new electronic roulette and jackpot games in Grosvenor; improving the gaming machine offering in Mecca; increased personalisation and a stronger live casino offering in the UK digital business and the recent launch of Yo Sports in Spain.
“The group has the benefit of a strong balance sheet, enabling us to continue investing in the business through this period.”
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Russ Mould, investment director at AJ Bell, said: “There’s a saying that during tough times our appetite for betting increases. People feeling the pinch of a higher cost of living or gloomier economic conditions are often prepared to bet the remaining cash in their pocket in the hope of winning big on the horses, football or other sports or games.
“Thus, faced with the current miserable backdrop, one might expect gambling firms to be raking it in. The evidence suggests it’s not that clear cut.”
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