Ladbrokes, Britain's second-biggest bookmaker, reported an increase in third-quarter underlying operating profit as a sharp rise in winnings from gambling machines offset a decline in bets placed over the counter at its shops.
The company, which on Monday pulled out of talks to buy online rival Sportingbet, made an operating profit of £49.7 million in the quarter to end September, up 8.5 per cent after stripping out the boost from the soccer World Cup to last year's numbers.
Ladbrokes, which has nearly 2,100 betting shops in the UK, said today net revenue was up 2.5 per cent in the period, including a 2 per cent rise in UK retail revenue.
Gross win (total bets minus payouts) from gambling machines grew by more than 20 per cent while over-the-counter net revenue was down 8.3 per cent.
The company said it had benefited from offering new games on its machines and was confident of achieving further double-digit growth from machines in the remainder of the year.
Ladbrokes said it was confident of meeting full-year forecasts despite a squeeze on consumer spending.
"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," chief executive Richard Glynn told reporters.
Market expectations for Ladbrokes' full-year Ebit (earnings before interest and tax) range between £174 million and £198 million, with the average at £187 million.
Shares in Ladbrokes, which had lost 16 per cent of their value since August, were up 2.4 per cent to 131.2 pence, outperforming the FTSE mid-cap index .
Ladbrokes had been in takeover talks with Sportingbet since June but the deal collapsed amid concerns over Sportingbet's business in Turkey where online gambling is illegal.
The breakdown of discussions with Sportingbet followed Ladbrokes abandoning plans to buy 888 earlier in the year following months of protracted talks.
Mr Glynn said the company would now focus on building its online business organically.
It had already committed to a £50 million investment programme over two years and will launch a new online sports betting product in the first quarter of next year. Mr Glynn said he expected the full benefit of that strategy to come through towards the end of 2012.
The company has already expanded its in-play betting offering, increasing the amount of football in-play events from 200 a week in August to 500 in October. It expects that to increase to 700 a week from November.
"Option A has always been the organic strategy," Mr Glynn said, adding that he had no regret over pursuing the aborted attempts to buy Sportingbet and 888.
"My job is to review any opportunity we have to accelerate our organic plan. If something crops up, only at the right price and without adopting any unnecessary and unmitigatable regulatory risk, then we'll look at it and if it's appropriate we won't shy away from it," he said.
Reuters
