Ladbrokes says had good World Cup after online woes
By Paul Sandle
LONDON (Reuters) - Ladbrokes said it had a strong World Cup, laying the foundations for a better second half after disruption caused by switching its online operations to a new platform caused first-half operating profit to fall by a third.
Britain's second-biggest bookmaker after William Hill has struggled to establish its online presence and an alliance with software developer Playtech has taken longer than expected to deliver improvements.
The group, which trades from more than 2,800 High Street locations as well as online, said operating profit fell to 56.8 million pounds, just beating market expectations, on net revenue up 1.6 percent to 577.8 million pounds for the six months to end-June.
Chief Executive Richard Glynn, who had come under pressure from some shareholders eager to see evidence of improvement, said the operational problems had been fixed.
"We set ourselves a target at the beginning of the year to make ourselves match-fit for the World Cup, and I think on anyone's examination we had a strong World Cup," he said in an interview on Tuesday.
"That sets up well for delivery of growth across the business in the second half of the year and into 2015."
Shares in the company, which have fallen 27 percent since the start of the year, were trading up 2.5 percent at 134 pence at 0821 GMT (9.21 a.m. BST).
Analyst James Ainley at Citi, who has a "sell" rating on the stock, said a renewed commitment to a "flat" full-year dividend should provide share support in the short term.
"The World Cup football performance adds a glimmer of hope for a digital revival," he said.
Analyst Nick Batram at Peel Hunt, who also rates Ladbrokes a "sell", said there was no doubt the platform and product range was improving, but with increased duties on gaming machines and other taxes, the management was trying to turn around the business in the face of a regulatory storm.
Staking on the football competition in Brazil, which started towards the end of Ladbroke's first half, grew more than 20 percent on the last competition in 2010, Glynn said, with much of the growth coming from mobile.
Overall margin for the tournament was 24.3 percent, with a strong run in the second half offsetting initially weak results.
The big difference for Ladbrokes for the Brazil tournament against South Africa four years earlier was in gambling on mobile phones, with mobile staking up more than 1,100 percent, the company said. The number of punters signing up on Ladbrokes' digital platform rose 48 percent for the competition, and active users were up 28 percent.
"The key now is to keep those customers, and grow more customers on the back of it," Glynn said.
Ladbrokes is increasingly focussing on football betting, which is more popular among younger men than horse racing.
Glynn said the group had a good kick-off to the English football season on Saturday, with stakes up 53 percent year-on-year. The higher profile Premier League starts on Saturday.
"We are expecting a really strong season, obviously subject to results normalising," Glynn said.
The fall in operating profit for the first half was broadly in line with market expectations, with analysts expecting 55.7 million pounds on average, according to a company-compiled consensus.
