Investors wiped more than AUD 100 million off the value of major gaming companies Tabcorp Holdings Ltd and Tattersall’s Ltd on Monday, after the pair warned earnings could be impacted by a horse racing industry shut down.
Smaller rival, online betting firm Centrebet International Ltd also lost value after weekend thoroughbred and harness race meetings were cancelled in a bid to contain an outbreak of highly infectious equine influenza that has rattled the industry.
Tabcorp lost AUD 105 million off its market value, Tattersall’s shed AUD 177.2 million and Centrebet AUD 7.9 million, as shares in all three tumbled.
But the companies signalled that any losses weren’t likely to be huge, allowing the stocks to end the day off their lows.
Tabcorp’s wagering division turnover was cut by AUD 65 million after the weekend races were called off.
The company said if the shut down was prolonged to next weekend, the turnover loss would be around AUD 150 million.
„This will translate to an adverse impact on Tabcorp’s group earnings of approximately AUD 5 million after tax,“ it added.
Tabcorp made a net profit of AUD 450.4 million in 2006/07, after its wagering business generated underlying earnings of AUD 253.7 million.
If races were suspended for even longer, the effect on Spring carnival racing from September would exacerbate lost turnover and earnings, it added.
Tabcorp chief executive Elmer Funke Kupper reassured investors, saying the business, which includes gaming and casinos, was diversified enough to weather the flu crisis.
He said the company supported the actions of the racing industries and state governments to control the virus.
„The measures taken, while painful in the short term, will protect the future of a great industry,“ Mr Funke Kupper said.
Federal Agriculture Minister Peter McGauran said that at least 70 properties, mostly in NSW, are suspected of being infected with equine influenza.
„We would expected considerably more properties to be identified in the coming days,“ he said.
Tabcorp shares closed down 20 cents or 1.26 per cent AUD 15.63, Tattersall’s lost 14 cents or 2.83 per cent to AUD 4.81 and Centrebet shed nine cents or 4.74 per cent to AUD 1.81.
Meanwhile, Tabcorp is working with its racing partners in Australia and overseas to adjust racing product on Sky pay television, increasing the number of New Zealand races being, and rescheduling several greyhound meetings for punters.
Tattersall’s, which last year took over Queensland wagering company UNiTAB, has suffered no material earnings impact so far.
But it said underlying earnings could be affected in the ban on horse racing continued.
If the situation continues, the potential weekly loss in earnings before interest, taxation, depreciation and amortisation will about AUD 2 million.
Tattersall’s said its UNiTAB business was monitoring the impact on its TAB operations in Queensland, the Northern Territory and South Australia.
Centrebet said if the ban lasted a month, it could wipe AUD 400,000 off its fiscal 2008 net profit.
„This is on the basis that all horse and harness races are cancelled and not postponed, which is a possibility being considered by the authorities,“ it said.
But Centrebet said it expected the impact would be mitigated by an increase in New Zealand and international horse-race betting, extra greyhound race meetings and an increase in sports betting.
Centrebet reported Monday a net profit of AUD 11.13 million for 2006/07 and maintained is guidance for earnings per share growth of 10 to 15 per cent this financial year.
The fiscal 2007 result followed a 26 per cent lift in revenue to AUD 58.9 million amid strong growth in both its wagering and gaming business.