Bookmaker sees a 49% rise in half-year profits, despite a disappointing digital performance.
Ladbrokes (LSE: LAD) reported a 49% rise in half-year profits to £107m, which puts the betting-shop chain on course for annual profits of £170m. Despite problems at its digital business, Ladbrokes managed to post an 8% rise in group net revenues to £529m. It has also hiked its dividend by 10% to 4.3p per share.
Ladbrokes said: "Strong growth in operating profit in UK retail and an improved performance in our European Retail and Telephone businesses was pleasing and more than outweighed a decline in Digital profits, which was greater than expected due largely to a weak sportsbook margin in Q2 and exacerbated by delays in technology."
The disappointing performance in Digital has cost Richard Ames his job as head of product. Ames was relieved of his duties just two days before the company revealed a halving of operating profits at its Digital division.
Ladbrokes added: "We remain committed to our Digital strategy of building a more competitive offer through a combination of on-going investments to enhance our marketing, product and technology."
To ensure an increased focus on its Digital business, the company has promoted its director of IT to the executive committee to ensure technology delivery is given "increased profile and scrutiny".
Digital is likely to be a key battle field between Ladbrokes and other bookies that include William Hill (LSE: WMH) and Paddy Power (LSE: PAP). It is unclear which will be the clear-cut winner. But in terms of shareholder return, Paddy Power has been a standout success.
The Irish bookmaker has delivered a total return of 1,170% over the last 10 years, which equates to an average return of 29% a year. William Hill is a distant second with a respectable annual return of 9.6%, and the backmarker with a substandard total return of just 2.9% has been Ladbrokes.
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> David owns shares in William Hill.