23rd Oct 2014 10:18
LONDON (Alliance News) - Ladbrokes PLC on Thursday said it is on track to meet full-year expectations and reiterated its dividend plans following a jump in operating profit and rise in revenue in the third quarter, yet its shares dropped as analysts expressed concern about its outlook for 2015.
The FTSE 250-listed bookmaker said group operating profit in the third quarter to September 30 was GBP33 million, nearly double the GBP17 million posted a year earlier, on the back of a 13% rise in net revenue.
It was boosted in the period by a strong performance in the 2014 World Cup in Brazil, generating stakes of GBP33.9 million for the competition, up 44% on the 2010 tournament, with an overall gross win margin of 28%. Excluding the World Cup, net revenue in the third quarter would have increased 10%.
Digital revenue was up 46%, given a big boost by its Australian operation where revenue rose nearly three-fold. Sportsbook net revenue in its digital arm was up 58%, while its Gaming division also returned to growth, up 1.4%.
UK retail net revenue was up 6%, backed by better football results for the company and improved over-the-counter margins of 17%, against 14.9% for last year.
OTC net revenue was up 6.3% in the quarter, driven by a good start to the new football season, though overall staking in the quarter fell 7.9% due to a continuation of the horseracing trends seen in the second quarter. Overall OTC staking in the year to date is up 0.5%, Ladbrokes said.
It posted a strong rise in revenue from its European retail business, with Belgian revenue rising 21% and Spain retail revenue increasing 83%.
On the back of the performance, Ladbrokes re-confirmed its plan to pay a full year dividend of no less than 8.9 pence per share, which was the previous year's payout.
"Ladbrokes is on track. The major operational improvements completed in H1 are now delivering growth. Our performance in the World Cup and throughout Q3 demonstrate that we are competing successfully and winning customers," said Chief Executive Richard Glynn.
Glynn added the fourth quarter has started in line with its expectations and said the group is on track to deliver full-year results in line with forecasts.
But shares in the company were amongst the worst performers on the FTSE 250 Thursday morning, down 4% to 123.8 pence.
Numis said that while 2014 looks rosy for the company, it is barrelling towards an "almost inevitable" decline in earnings for 2015 on the back of increased and new duties.
In December, Numis expects the publication of industry research on the impact gaming machines in betting shops have on problem gamblers. Whatever the outcome of that report, it believes this will "trigger an unwelcome revival of political interest" in what is a key source of revenue for betting shops.
On the back of that forecast, the broker said it thinks Ladbrokes' share price will underperform as profits decline.
By Sam Unsted; [email protected]; @SamUAtAlliance
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