Ladbroke profits slump as heatwave keeps punters away

Ladbrokes’ customers shunned betting shops during July’s heatwave, contributing to a slide in first half operating profit which underscored the need to build up its online business.

Britain’s second largest bookmaker has been less successful than larger rival William Hill in exploiting the growing online market and expanding overseas, making it more dependent on its chain of almost 2,300 shops on British high streets.

The company has over 213 shops in the Republic.

Overall group operating profit fell almost 20 per cent to £85.7 million pounds ($133 million), the company said today.

Its UK Retail business, still its largest division, was hit by higher costs and taxation and a slowdown from the popular gaming machines that had been a growth driver in recent years.

Ladbrokes also said a heatwave in July cut customer numbers in betting shops by up to 15 per cent, with earnings from machines down 9.2 per cent over the month. "Although this weather effect is one off, it is unlikely that lost machine revenue will be recovered during the rest of the year," it said.

Ladbrokes warned investors in April it expected operating profit to fall this year after a poor performance from horse racing and online gaming in the first quarter.

Shares in Ladbrokes fell 3.5 percent to 200.3p in early business.

Ladbrokes shares had risen by 27 per cent over the past year, compared with an increase of almost 60 per cent for William Hill.

The growth of online gambling and relaxation of rules on gambling in a number of US states have helped to attract investors to the sector.

Ladbrokes has taken steps to address some of the problems that have held it back. It has formed an alliance with Playtech, the online gaming software company that was previously a joint venture partner of William Hill.

Ladbrokes also paid €30 million earlier this year to buy Irish-based Betdaq, a smaller rival to betting exchange company Betfair.

Ladbrokes reported one-off costs of £21.8 million in the first half, largely related to its new partnership with Playtech that will see a new mobile gambling site launched early in 2014.

Chief executive Richard Glynn said he was disappointed that progress in reshaping the business was not yet reflected in the bottom line. "We have maintained the dividend for shareholders, confident that the plans we now have in place will generate growth in earnings in 2014 and beyond," he said.