22nd Apr 2015 06:59
LONDON (Alliance News) - FTSE 250-listed bookmaker Ladbrokes on Wednesday said many of its customer metrics improved in the first quarter of 2015 but said betting results have favoured customers and its profits were materially lower in the period.
Group net revenue was up 3.3% in the quarter, with UK retail net revenue up 4.3% and digital net revenue up by 9.5%, despite the latter taking a big hit from a sharp fall in revenue from its Sportsbook business which was offset by a good performance in Australia.
In its digital business, Ladbrokes.com Sportsbook, gross win margin dropped significantly due to unfavourable sporting results, falling 2.5 percentage points to 4% in the quarter. Adverse football results, a weaker Cheltenham race, and a significant loss to a small number of high-stakes customers was incurred in the quarter and is not expected to reverse over the year, Ladbrokes said. Those factors drove lower margins and a sharp decline in net revenue in the business, 32% year-on-year.
The UK retail business also was hit by customer-friendly results and gross win margin in the first quarter was well below its 16.5% to 17% target at 15.7%, down 0.5% percentage point year-on-year. Over-the-counter stakes in the UK retail business fell 4.8% in the quarter, or 3.2% when adjusted for shop closures. Ladbrokes closed 15 shops in the first quarter, in line with plans to close around 60 this year.
OTC staking trends in UK retail were improved compared to the third and fourth quarters of 2014, Ladbrokes said, with an improvement in horse racing and staking growth around Cheltenham.
In its European retail business, the group said it has benefited in Belgium from investments made in self-service betting terminals, while its Spain joint venture is benefiting from its expansion made in 2014. Northern Ireland saw similar product trends and net revenue growth to the UK, while Republic of Ireland revenue declined by 1% in the quarter.
On Tuesday, Ladbrokes had outlined plans to restructure the loss-making Irish business, in a move expected to result in redundancies at all levels of the operation.
"In the first quarter many of our customer metrics are encouraging but results have favoured customers and profits are materially down. 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," said Jim Mullen, Ladbrokes' chief executive.
By Sam Unsted; [email protected]; @SamUAtAlliance
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