Ladbrokes grows even in hard times
By Adam Ulick | May 19, 2008
Many companies in the betting industry have sustained large losses this quarter, but Ladbrokes plc had a profit increase even with a lawsuit in process.
UK betting monster Ladbrokes plc has just reported a 13% profit increase for the first quarter of 2008, showing great resiliency in a time when most of the industry is experiencing losses or at least some shrinkage. As if this were not an impressive feat on its own, Ladbrokes is not taking into account high roller bets to calculate this profit increase (Ladbrokes’ high rollers place bets of five figures on single events, thus making the profits very volatile;) if high roller bets were taken into account the profit increase would be 34% on what has been a dire year for the industry.
The growth was far from uniform: according to the reports the greatest increases came from machines, whose improved screens and content and longer opening hours netted Ladbrokes 26% more than last year; as well as from online gaming, with a 24% increase in profits. UK retail income grew 11%, with the decline in horse racing bets more than compensated by the increased interest in football. Telephone betting and online poker saw small decreases in revenue, but customer acquisition improved by a whopping 27%, which probably means that profits are bound to rise soon when all those new players hit the tables and slots.
Management is pleased with these results, but not complacent – they are perfectly aware of the recessive trend in the industry and are taking measures to strengthen Ladbrokes against a potential cutback. Ladbrokes' Chief Executive Chris Bell summarized his view of the situation by declaring to Reuters: "We're not recession proof but we are recession robust."
Bell expanded on Ladbrokes’ results and short term plans:
Gross win grew strongly during the period and, whilst our business has seen no evidence yet of a consumer downturn, we remain mindful of general economic conditions.
The Group remains focused on enhancing shareholder value by growing its established retail businesses, developing the new opportunities in Italy and Spain and driving the top line in eGaming through marketing investment in customer acquisitions.
Ladbrokes is currently considering purchasing “The Tote,” a British government controlled bookmaker, but plans are still in the early stages.
Following the release of these quarterly results, Ladbrokes’ stock (LSE:LAD) had a value increase of 2.98% in the London Stock Exchange.
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