Ladbrokes, which on Monday pulled out of talks to buy online rival Sportingbet, reported results for the third quarter of 2011 today. Net revenues grew 3%, as an increase in the company’s UK retail business offset a marginal decline in online revenues. Operating profits rose 9% after stripping out the impact of last year’s World Cup.
Online sportsbook revenues fell 6%, despite a 6% year-on-year increase in amounts staked, but casino revenues were up 11%, boosted by new supplier deals signed with Microgaming in June. However, the rise in casino revenues was offset by a 13% drop in poker revenues, and a 14% decline in active players from the same period last year.
Gross win (total bets minus payouts) from gambling machines grew more than 20%, while over-the-counter revenues were down 8%. Indicative of the industry trend, mobile growth was stellar, as revenues spiked 163%. Chief Executive Richard Glynn also highlighted the cross-channel deployment of games like Rainbow Riches, which will be accessible online and via mobile following their success in retail outlets.
Glynn confirmed in a conference call that Ladbrokes would apply for an online licence in Spain when the market opens this year. Further, Glynn, who has walked away from four potential deals in the last 18 months, admitted the company was monitoring other regulated markets. Labrokes’ land-based joint venture in China with AGTech launched its first product to the Chinese market in August.
Management, which next year will launch upgraded online sportsbook and mobile products, also said it is on track to meet full year expectations. Market estimates for EBIT (earnings before interest and tax) range from £174 million to £198 million, with an average of £187 million, according to a Thomson Reuters I/B/E/S poll of 13 analysts.
“We are very cautious on the UK economy. Our view is that our products for customers are that necessary little piece of chocolate that people need at a time of unremitting gloom,” said Glynn.
Ladbrokes shares, which had lost 16% of their value since August, were up 2% on the London Stock Exchange today, outperforming the FTSE mid-cap index.