UK-based gambling operator Ladbrokes plc announced its trading update for the first quarter of fiscal year 2015. As it was reported, earnings before interest and tax declined 22.3% year-on-year, while net revenue increased 3.3%.
EBIT amounted to £14.3 million for the three-month period ended March 31. By comparison, the amount of £18.4 million was posted this time last year. The drop was mainly attributed to the recently imposed Point of Consumption tax, the increase in the Machine Games Duty, as well as to the company’s withdrawal from certain unregulated online markets.
As previously reported, a 25% rate of Machine Games Duty was effective as of March 1, 2015.
Jim Mullen, Chief Executive Officer of Ladbrokes, commented that the company’s Q1 results have favored their customers and this imminently led to a decrease in profits. He also pointed out that the gambling operator needs to change its business strategy, so as to be able to meet its customers’ demands and to respond to the constantly changing gaming market in a timely manner.
Ladbrokes’ sportsbook key performance indicators remained strong as a 62.7% rise in mobile staking was posted. Gross win margin declined considerably, due to unfavorable sports results. The company’s digital gaming division seems to have improved in the first quarter of 2015. Net revenue from digital operations in Australia increased and this was attributed to the purchase of Betstar in the second quarter of 2014.
Mr. Mullen commented that, generally speaking, digital results met executives’ expectations.
The company’s UK retail operations were impacted by unfavorable sports results. This resulted in gross win margin lower than the predicted 17%. Ladbrokes closed a total of 15 shops in Q1. Earlier this year, the operator announced that it is to shutter 60 of its facilities across the United Kingdom in 2015. Currently, there are as many as 2,194 shops operating in the country.
In Belgium, the operator benefited from its investment in new content and self-service betting terminals. Stakes were up almost 50% and net revenue increased 11.3%. In Spain, the amounts staked rose 55.8% and net revenue increased 33.8%. A 1.2% rise in the amounts staked was posted in Ireland. Net revenue in the Republic of Ireland dropped by 1%.
Mr. Mullen also commented on the company’s decision to request examinership in Ireland as indicative of the “seriousness of their intent” to further develop and improve their operations. As reported yesterday, Ladbrokes Ireland sought Court protection, as profits have been declining for several years now. Currently, there are 196 Ladbrokes shops in the country and almost 850 people are working at those.
