Ladbrokes shares slump on profit warning

Betting shop owner Ladbrokes has announced an expected fall for operating profits for their online business in 2013 below current market expectations with a range of £10m to £14m. (Release)

Ladbrokes shares fell nine per cent following the announcement.

In its interim management statement, the gaming company says that the second half of 2013 has, so far, been challenging. Footfall in its UK retail business has normalised, but digital earnings continue to reflect a lack of competition in sportsbook.

Peter Erskine, Ladbrokes' chairman, said:

Ladbrokes continues on its journey to modernise the business and make it fit for purpose in the rapidly evolving betting and gaming sector. While we are disappointed that the Digital results are still not where we anticipated they would be, the Board believes that the strategy is the right one and that the actions taken to date, along with those planned for the coming months, will drive the long term success of the business. We remain fully confident in this management team to deliver them.

A strong belief in the ultimate success of these plans underpins our commitment to maintaining the dividend at its current level for 2013 and additionally, at least maintaining it in 2014.

Michael van Dulken explains Ladbrokes position:

Ladbrokes (LAD) bottom of the FTSE 250 this morning (-8.7%, 8 down days in a row) as traders balk at a profits warning for the ‘Digital’ division as improvements from significant modernisation and process integration to create a fully integrated platform are yet to feed through, and a lack of competitiveness and lower margins is disrupting things significantly.