Bad sports results hammer Ladbrokes profit

The latest quarterly results report from the land and online gambling group Ladbrokes plc reveals that operating profits plunged 60 percent quarter-on-quarter as a result of unfavourable football and horse-racing results.

Profit before tax and excluding one-off costs was GBP 14.3 million in Q1-2015 compared to GBP 35.6 million in the last three months of 2014, and a year-on-year comparison shows that profit is down 23 percent, from GBP 18.4 million in the first quarter of 2014.

The company admitted that its gross win margin was “well below target” of 17 percent, at 15.7 percent.

On the retail side, the group saw declining punter visits in its high-street stores. The bookmaker, which has 2,194 betting outlets, closed 15 shops in the first quarter, and plans to close 60 in total this year.

Jim Mullen, Ladbrokes’ new chief executive who took the helm at the start of the month, said:

“These results demonstrate the challenges we continue to face. We need to change the way we run the business, build scale – primarily in Digital – and respond faster to the customer and changes in the market place.

“I will complete my review of the wider business quickly and I will present some of the principal changes that I intend to make, in June, earlier than planned.

“Shareholders should expect me to focus on how we will build an effective competitive position, develop scale and resilience over the medium-term.

“We have laid solid operational foundations but there is still a lot to be done.”

The quarterly report notes that in Digital net revenue exc. Australia was up 9.5 percent, and the sportsbook KPIs remain strong, with mobile staking up 62.7 percent, although the margin and net revenue was significantly down, reflecting company-adverse sports results.

Australian Digital numbers were impressive, with wagers up 77.8 percent; active players up 137 percent; net revenue up 132 percent and margins at 9.8 percent.

Ladbrokes.com Gaming trends improved again in Q1 driven by strong growth in active online punters, especially in Australia where net revenue growth benefitted from the acquisition of Betstar in Q2 2014 and an improved margin.

Digital operating costs remain in line with expectations, and overall results in other Digital operations have broadly met anticipation.

In general, the company reported on the impact of new UK taxes and its withdrawal from unregulated digital markets in line with the guidelines of the UK Gambling Commission – Q1-2015 EBIT decreased by 22.3 percent

The group’s net debt reduced by GBP 28.7 million to GBP 390.5 million at 31 March 2015.