Punters luck hits Ladbrokes profits
Bookmaker Ladbrokes today said profits were down by a third after punters enjoyed a successful Cheltenham Festival.
Lucky strike: Ladbrokes is feeling the pain after a successful Cheltenham Festival for punters
An unusually high number of horse race cancellations also affected the performance in the four months to 30 April, although Ladbrokes said more normal trading patterns had returned in recent weeks, helped by a favourable outcome in the Grand National at Aintree last month.
Chief executive Chris Bell said predicting activity levels in the current climate was difficult, but he added that he remained confident in Ladbrokes' performance over the year.
In a trading statement, Ladbrokes said its gross win - the amount left by losing punters - declined by 4% in its UK retail division.
Including the impact of free bets, over-the-counter gross win reduced by 11% in the four months to 30 April. However, this was offset by a 5% improvement in the average weekly gross win per gaming machine.
Revenues from telephone betting fell 54%, reflecting the impact of horse racing cancellations and poor results.
High-roller customers generated profits of £25m for the company in the four month period, down from £40m a year earlier, although it has generated a further £17m so far this month.
Shares fell 5% today as analysts said the 34% decline in the company's profit for the period was worse than expected. The measure excludes the high-roller customers and is based on continuing operations.
The group, which has more than 2,500 betting shops, posted operating profits of £243.8m in 2008, an increase of 0.9% on a year earlier.
The high-roller business prompted Numis Securities to raise its full-year profits forecast by 9% to £198.4m, although it warned there was a downside risk to estimates if current trading does not improve.
Investec Securities said the trading statement was disappointing in the context of more bullish updates from William Hill and Paddy Power.
Gross win for the group in the four month period was flat, against Investec's expectations for growth of 4.7% across the full year.
Analyst Matthew Gerard said: 'Although margin volatility in over-the-counter retail is to be expected, the impact of poor sporting results in March has had a bigger impact than we expected given William Hill and Paddy Power's recent guidance.'
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