Ladbrokes 2009: pre-tax profit falls 28%; egaming 16% 18/02/2010

Jon Parker

LADBROKES’ pre-tax profit is down by more than a quarter, the bookmaker’s 2009 year-end results reveal. 

Pre-tax profit fell 28% year-on-year (YoY), reflecting tough economic conditions and punter-friendly results hitting margins in the third quarter, landing at £191.3m ($301.5m) from 265.6m in 2008. 

“In the third quarter, our customers had a good and long- running winning streak,” chief executive Christopher Bell said in a conference call this morning, also blaming the UK economy. 

As reported on EGRmagazine.com, Ladbrokes’ third quarter results were hit by football bets after the first 66 Premier League matches saw just four draws, compared with a five-year season average of 25% of games drawn. The ill fortune continued in the winter, with a UK cold snap having causing a wave of racing abandonments in December and January, and group net revenue down by 4.6% in the first seven weeks of 2010. 

The company, which has more than 2,700 betting shops in addition to its online business, said 2009 net income fell to £74.4m ($116.3m), or 9.9p per share, from £200.7m, or 28.3p; while revenue dipped 10% to £1.03bn. 

Its egaming profit fell 16% YoY to £46.1m. 

Ladbrokes also launched a deal with Worldspreads Group for the provision of financial spread betting, a deal that could contribute in the “small M’s” to earnings before interest and tax, Bell said. 

However the company failed to reveal any progress on finding a replacement for Chris Bell, who is stepping down as chief executive this year after nearly 20 years at Ladbrokes. 

Analyst James Hollins of Daniel Stewart attributed the uncertainty to its “less bullish recommendation” that investors hold rather than buy Ladbrokes shares, as well as to “limited ex-UK online exposure, an underperforming machine estate (although this should be rectified throughout 2010/11) and concerns over UK unemployment labour force.” 

The results cap a tough 2009 for the company during which Ladbrokes was forced to raise £274.6m in a rights issue in October to strengthen its balance sheet. 

To repair fortunes, however, Ladbrokes launched a new version of its online sportsbook last month with plans to live stream over 30,000 sporting events on the site this year, and today revealed a joint venture deal to launch an online sportsbook targeting the South African market and for marketing throughout the rest of Africa. 

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Posted: 18/02/2010