Revenue growth prompts Viva Leisure to look for further fitness club acquisitions

Leading health club owner Viva Leisure has indicated that it is looking acquire new gym locations after reporting its half-year results on Thursday.

Reporting $79.1 million in revenue for the period July to December 2023, an increase of 17.3%, Viva Leisure advised that membership across its network increased by 9.8% to 180,071 in owned locations and by 6.2% to 345,317 in all locations.

It told the market that for the six months to December, its net profit was $1.5 million, which was steady on the previous corresponding period.

With its locations increasing by six to 168 in owned locations and by seven to 345 in all locations, despite several club closures, the ASX-listed operator said in its half-year result that it was in late stage due diligence for several acquisitions, which would be funded through a mix of available debt facilities and existing cash reserves.

Commenting on the half year performance, Viva Leisure Chief Executive and Managing Director, Harry Konstantinou advised “our HY2024 results continue to highlight the resilience and robustness of Viva Leisure's strategic direction and operational capabilities.

“On the back of a significant surge in revenue last financial year, this has continued in the first half with a 17.3% increase to $79.1 million for the half (a 7% increase half on-half).

“This increase comes during a period where the company slowed its greenfield program and focused on its previously announced strategic review which included accelerating its refurbishment and upgrade program, whilst also having to close several locations which were under-performing and approaching the end of their lease term.

“Our EBITDA has climbed to $16.6 million, an increase of 18.6% from PCP and 9.2% half-on-half, a reflection of our relentless pursuit of improved margins and operational excellence. The increase in EBITDA margin to 21%, and notably surpassing 22% in the second quarter, demonstrates our company’s capacity for sustained financial performance.

“Utilisation rates remained strong, and our continued reinvestment back of $8.5 million for the half into the company sets the stage for continued expansion and innovation.”

Looking forward, Konstantinou added “as the appreciation for health and fitness maintains its upward trajectory around the world and in Australia, Viva Leisure remains at the forefront, ready to cater to the expanding demand within our established markets and beyond.”

Referencing Mckinsey’s recent study of the wellness market, Konstantinou went on to say “(the study) underscores this trend, with over 70% of participants acknowledging the significance of investing in personal health and appearance, and upwards of 60% citing the gym as a fundamental aspect of their wellness regimen.

“This positions Viva Leisure advantageously in the market.”

Despite mainstream media focussing on club closures, a recent study from retail intelligence platform GapMaps showed that in the 12 months to 31st August 2023, for every gym closure, two clubs opened.

Image: A member at one of Viva Leisure's Club Lime facilities (top) and the newly opened Club Lime at Westfield Parramatta in Western Sydney (below). Credit: Viva Leisure.