Ladbrokes sees Q1 profits drop £13m
Operator had planned for reduction in group operating profit due to known taxation and cost headwinds in UK retail business
In an early release of its first quarter results Ladbrokes has announced a 25.8% drop in profits for the first three months of 2013 while admitting that full-year profits will be “at the bottom of the existing market range”.
In its financial results for the three months ended 31 March, group net revenue was up 3.3%, however operating profit fell £13m to £37.4m in the period. This drop was attributed to the £9m increase in like for like costs and machine taxation in UK Retail as previously flagged, and a £6m decline in revenues from Cheltenham, the operator said in a statement.
Lads’ online business, which is expected to be given a new lease of life following its partnership with Playtech, saw net revenues drop 0.7% in the period, with sportsbook growth of 13.2% offset by an 11.4% decline in gaming largely driven by lower revenues from high value customers in casino.
This morning’s statement explained that the partnership would allow it to revitalise its non-sportsbook online offering, but “the risks of disruption from transition are inevitable” and as a result expected to see “digital” profits decline in 2013. The Playtech deal has already seen the launch of a dedicated ‘Vegas gaming’ tab on Ladbrokes.com while its mobile offering will be relaunched on the Mobenga platform.
While sportsbook growth has was driven by a stronger margin, particularly during the first six weeks of the period when margin was 10.8%, there was a decline in sportsbook amounts staked, in part expected due to the impact of reducing ‘unprofitable’ turnover. The operator there would “inevitably” be an initial period of transition as existing customers familiarise themselves with the new site and we optimise their user experience.
CEO Richard Glynn (pictured) insisted that the company was making progress “in implementing the plans necessary to transform Ladbrokes”. He said that though the business would always “be subject to the vagaries of one off events and short term trading trends,” Ladbrokes would continue with its current strategy.
“We have a number of initiatives in the business already underway to redress some of the areas highlighted by the first quarter’s trading,” he continued.
“With our new sportsbook fully launched, we have a strong online offer and expect it to play a big part in growing the business, following an initial period of transition.”