Ladbrokes share price slides profits hit by punters and new taxes
The numbers
Ladbrokes' share price is down two per cent this morning after reporting a fall in operating profits cent year-on-year of 22 per cent to £14.3m. Group net revenue rose 3.3 per cent for the quarter to 31 March. The digital side of the business continues to grow strongly with mobile betting up 62.7 per cent.
Why it's interesting
Results favouring punters have hit Ladbrokes hard and the company's chief executive is bringing forward his review of the wider business to June.
Regulatory and tax pressures have forced the bookies to close 150 shops over the past year. Last year's Budget hit bookmakers, with a rise in machines games duty from 20 to 25 per cent. Gambling profits have been targeted by a point of consumption tax that took effect in December.
The bookmaker also withdrew from unregulated digital markets to comply with guidelines set forth by the UK gambling commission. Campaigners and politicians have consistently been taking aim at one of bookmakers' major sources of income – fixed odds betting terminals.
What Ladbrokes said
Jim Mullen, chief executive of Ladbrokes, said:
In Q1 many of our customer metrics are encouraging but results have favoured customers and profits are materially down. These results demonstrate the challenges we continue to face. We need to change the way we run the business, build scale, primarily in Digital and respond faster to the customer and changes in the market place.
I will complete my review of the wider business quickly and I will present some of the principal changes that I intend to make, in June, earlier than planned.
In short
Ladbrokes remains in a tough spot with a tougher tax and regulatory environment and the luck of the punters eating into profit margins. All eyes will be fixed on what Mullen presents in June to turn the company around.