Shares in Ladbrokes plunged over five per cent today as the UK betting company reported its pre-tax profits nearly halved to £67.3m from £123.7m in the first half of the year. Basic earnings per share fell to 5.2p from 12.5p.
It warned that it is no longer expecting like-for-like revenue growth from gaming machines for the rest of the year – something that has been a major contributor to growth in its high street business over the last three years.
Commenting on the results, Richard Glynn Chief Executive said:
Following a strong performance in 2012, we have continued to make good operational progress against our strategy which, disappointingly, is not reflected in our first half financial performance.
Retail continues to be an integral part of the betting experience, providing sustainable and dependable revenues. We plan to carry on expanding our estate, evolving our offer and improving our trading capabilities to provide compelling value for our customers and take advantage of opportunities for growth.
Having established a position of market leadership in machines, with like for like revenue increasing by c.40% in the last 3 years, we always planned for a slowdown this year. We continue to compete strongly in a highly competitive market and have a number of initiatives in place for H2, including a new cabinet rollout starting in Q4.
As seems to be the trend with exceptionally good and bad performances by retailers, Ladbrokes blamed the prolonged hot weather in July for a reduction in trading.
Although recent weakness appears to have been influenced by one off factors, the July weather has exacerbated the volatility we were already experiencing, making underlying trends difficult to identify. In the remainder of 2013, as in H1, we expect to see a positive machines contribution from new shop openings and increased density, but are no longer planning on like for like growth.
Ladbrokes looks to be pinning its fortune on further online growth.
In Digital, our partnership with Playtech will see us deliver a compelling online and mobile offer for customers underpinned by proven software, operated by experts. During H2 we will build on early progress already made by adopting Playtech products and technology and expect to benefit from new marketing and CRM capabilities. We aim to finalise the integration early in 2014, thereby enabling significant growth in earnings.
Ladbrokes announced an interim dividend of 4.30p, the same as in the prior year.