Supplier News
UK – Ladbrokes down by half due to ‘prolonged hot weather’
By Phil - 9 August 2013
Ladbrokes’ half year results wilted in the sunshine as good weather in the UK kept people away from its betting shops.
Britain’s second biggest betting operator saw pre-tax profits fall by half to £55m compared to £107m last year. The primary reason; visitation at its 2,270 Licenced Betting Offices, was down by 15 per cent, forcing revenue from its in store gaming machines down too. The weather also affected Ladbrokes’ spring results with rain seeing the cancellation of numerous race meetings.
Analysts also blamed the lack of a major, summer football tournament highlighting that Euro 2012 brought in £28m in revenues for Ladbrokes last year.
With digital operating profits down from £15m to £11m, Richard Glynn, Chief Executive, pointing to the company’s recent digital partnership with Playtech, which he said would make Ladbrokes a ‘dangerous’ competitor next year.
“We will be an ugly competitor and that’s my goal,” he said. “Following a strong performance in 2012, we have continued to make good operational progress against our strategy which, disappointingly, is not reflected in our first half financial performance. Retail continues to be an integral part of the betting experience, providing sustainable and dependable revenues. We plan to carry on expanding our estate, evolving our offer and improving our trading capabilities to provide compelling value for our customers and take advantage of opportunities for growth.
Having established a position of market leadership in machines, with like for like revenue increasing by 40 per cent in the last three years, we always planned for a slowdown this year. We continue to compete strongly in a highly competitive market and have a number of initiatives in place for H2, including a new cabinet rollout starting in Q4.Machine performance has however been inconsistent in 2013, and the market rate of growth slower than expected with positive trends towards the end of Q1 not maintained during Q2 which was more variable. Following a decline in June, prolonged hot weather in July severely impacted trading. Although recent weakness appears to have been influenced by one off factors, the July weather has exacerbated the volatility we were already experiencing, making underlying trends difficult to identify. In the remainder of 2013, as in H1, we expect to see a positive machines contribution from new shop openings and increased density, but are no longer planning on like for like growth.
“In Digital, our partnership with Playtech will see us deliver a compelling online and mobile offer for customers underpinned by proven software, operated by experts,” he continued. “During H2 we will build on early progress already made by adopting Playtech products and technology and expect to benefit from new marketing and CRM capabilities. We aim to finalise the integration early in 2014, thereby enabling significant growth in earnings. The strength of our balance sheet provides a firm foundation on which to build and we have maintained the dividend for shareholders, confident that the plans we now have in place will generate growth in earnings in 2014 and beyond.”
