Ladbrokes record higher than expected profits in Q1

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Ladbrokes continue to manage slipping stakes in the retail sector

DESPITE a Cheltenham Festival described as the worst ever for the bookmaking industry, on Thursday morning Ladbrokes returned better-than-expected profits for the first three months of 2016.

In a trading update, Ladbrokes reported a year-on-year growth across the Group of 10.6 per cent, when around eight per cent had been forecast.

Over the counter stakes were down by 1.3 per cent, in keeping with a wider trend that has seen stakes in shops fall in four of the last six quarters. Net revenue in shops was 4.1 per cent, just 0.2 per cent down on the same period in 2015.

There was a significant slowing in growth from controversial fixed odds betting terminals (FOBTs). Year-on-year gross win growth stood at just 1.5 per cent, compared with 3.7 per cent in the final quarter of 2015 and 12.2 per cent in the corresponding period last year.

“Results throughout the first few weeks were largely in our favour,” said chief executive Jim Mullen, who took on the role in March 2015. “We see plenty of evidence that indicates our plan is working but we are still early in our turnaround strategy and our priority remains on continued growth in our recreational customer base.”

As predicted, Ladbrokes avoided the worst of the Cheltenham firestorm as a result of their less aggressive marketing strategies.

“At Cheltenham we were reminded of the intense competition with offers and pricing at levels which, in our view, abandoned bookmaking principles,” explained Mullen.

Mullen also called Grand National victory for 33-1 shot Rule The World “a welcome contrast to Cheltenham” and revealed that the firm faces a liability of around £3million should Leicester City go on to win the Premier League.

It was also revealed that the Competition and Markets Authority have extended their timescale until mid-May for the publication of their provisional findings into the proposed merger between Ladbrokes and Coral.

Ladbrokes’ report sparked a positive reaction from the markets, with their share price jumping up by 5 per cent to 120.10p at the opening of business in London.

 

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