Ladbrokes PLC (LON:LAD) reveals lower-than-expected growth despite £11m Grand National payday.
Ladbrokes (LSE: LAD) this morning warned that a "softer" three months than the comparable first quarter in 2012 meant that group operating profit fell £13m to £37.4m, blaming "a number of specific one-off factors in the latter part of the period" amid challenging trading conditions.
Although the bookmakers knew that the quarter would see less profit due to known taxation, cost headwinds in UK Retail rising about £9m and the expected second-half weighting of growth in Digital revenues, other factors contributed to a worse figure than expected.
These include a £6m reduction in year-on-year profit from Cheltenham, £7m lower revenues from high rollers (Q1 2013: £7.2m against £14.2m in Q1 2012) and an abnormally large number of racing cancellations due to poor weather in the UK.
The news comes despite its announcement that the Grand National saw a spike in year-on-year profits for Ladbrokes, which generated a gross win of £11m (£15m for the group), up by around £4m from last year.
Ladbrokes recognises that it is in the middle of implementing its reinvigoration strategy, with a strong push on Digital that has seen the delivery of a new Digital sportsbook alongside further improvements in pricing trading and liability management and strong cash generation in the quarter. However, following the deal with Playtech coupled with the one-off factors outlined above, the company now expects group operating profit for the year to be at the bottom of the existing market range.
The share price plummeted over 8.5% in early trade this morning to 189.20p, some way off its 2013 high of 243p achieved in March but which has since seen a steady decline.
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> Sam does not own shares in Ladbrokes.