Bookmaker Ladbrokes has said it is reeling from its "worst Cheltenham ever" in March this year, but has posted strong results despite the downer from the annual festival.
Ladbrokes posted an "encouraging" start to the year this morning and said results were especially positive before the bookie's worst ever Cheltenham in March.
Net revenue grew 10.6 per cent and digital net revenue received a huge boost of 36.5 per cent, driven by the increasing popularity of online betting and gaming.
European retail net revenue rose 6.5 per cent, while the firm's Australia business posted a boost of 38.4 per cent in local currency terms.
The bookie also reported 59 per cent year-on-year growth of sports betting net revenue - the ninth consecutive quarter of year-on-year growth in sports.
Ladbrokes said it is "confident" its results throughout the rest of 2016 will be in line with expectations.
Why it's interesting
Bookmakers warned they were universally hit by this year's Cheltenham festival and lost more than £60m to punters as heavily backed horses consistently won races.
"At Cheltenham we were reminded of the intense competition with offers and pricing at levels which, in our view, abandoned bookmaking principles. We competed hard but refused to pursue unsustainable strategies," chief executive Jim Mullen said.
Ladbrokes also confirmed that it has a £3m liability if Leicester City win the Premier League and has said its major focus of the second quarter will be to prepare for the European championships.
Despite these difficulties, growth in net revenue this quarter will come as a relief to the company after new gambling and point-of-consumption taxes took their toll during full-year results released in February.
Ladbrokes is also gearing up to merge with fellow betting industry giant Gala Coral later this year. The tie-up will create the UK's largest betting company, although the firms will need to wait until mid-May for a provisional decision from the government's Competition and Markets Authority on whether the merger has been approved. The £2.2bn deal was agreed last year.
What Ladbrokes said
Jim Mullen, Ladbrokes chief executive, added:
Since July 2015 we have been successfully implementing our strategic plan and the encouraging customer metrics we saw at the end of the year have continued during the first quarter of 2016.
While results have generally been favourable, Cheltenham proved to be the worst in living memory which took some of the shine off the period. While we see plenty of evidence to support that our plan is working, our focus remains on delivering against our strategy and our 2017 targets.
What others have said
"This is an encouraging statement. Ladbrokes’ group revenues in Q1 were up 10.6 per cent versus our H1 expectation of +7.9 per cent. The group should benefit from Euro 2016 in Q2 and this implies that the revenue beat for the first half as a whole should be greater again. Against a backdrop of negative commentary relating to Cheltenham, we suspect that this statement will very much ease investor concerns. Our current EBIT forecast for Ladbrokes sits five per cent above consensus (£99.5m versus £94.8m) and we see scope to increase our numbers by a couple of percent at least at this point. Clearly market revisions should be greater again," David Jennings, analyst at Davy Research, said.
Ladbrokes has exceeded expectations and brought back solid growth to key segments such as online and gaming, despite a knock from the bookie's worst ever Cheltenham run.