Ladbrokes Coral buoyed by strong growth in online gambling

Business News

Ladbrokes Coral confirmed first-half operating profits at the top end of previous guidance, doubled its interim dividend and said synergies from last year’s merger were expected to be more than double the original estimate.

The bookmaker, which last month pre-released its top-line results, posted results on Thursday and an update for the seven weeks since, where it said net revenue was 6% ahead of last year and sports gross win margins were ahead in the UK and Italy but behind in Australia.

Interim results showed group operating profit of £158.3m for the first six months of the year, up 7%, on proforma revenues up 1% at £1.2bn.

From a profit before tax down 8% to £23.1m, underlying earnings per share increased 58% to 5.7p and basic earnings per share halved to 1.0p.

The dividend was doubled to 2.0p, which chief executive Jim Mullen said reflected “the progress made, the opportunities offered by the merger and our confidence in the future”.

Having completed the merger of the Ladbrokes and Coral businesses last November, the main aim for the year had been to complete the integration of the two teams and the digital offering onto a single platform.

Synergies from the merger will “step up substantially” in the second half, Mullen said, to deliver a full year saving of £45m and he now thinks synergies will reach £150m per annum by 2019, more than double the original estimate.

As reported in July, the six month period saw strong digital growth, ongoing momentum in Australia, and market share gains in Italy despite adverse sporting results.

UK retail declined as expected given the planned commercial decisions on UK racing media rights and Ladbrokes’ horse racing margin, “both of which will protect the profitability of our shop estate well into the future”, Mullen said.

In the seven-week period from 1 July 2017, total group net revenue was 6% up on last year or 5% at constant currency rates, with digital net revenue up 15% and sports up 29%.

Sports gross win margins were ahead in the UK and Italy but behind in Australia, with gaming net revenue slowing to 4% growth as UK retail revenue fell 1%, with a strong margin performance in the seven weeks and an improving stakes position as we re-established coverage of all UK horse racing.

Said Mullen: “In summary, we are in good shape, we have come a long way in a short time and we have positioned the business well for making the most of the opportunities presented by the merger.

“The interim results leave us in line with our expectations for the year and while there remains much to do, we are confident in the opportunities that exist for the business.”

Ladbrokes Coral shares were up more than 1% in early trading.

Broker Shore Capital said it was a “solid” set of results, with EBITDA better than its expectations of £200m in spite of well publicised unfavourable sporting results, with UK retail showing better than expected cost control.

Current trading was felt to look “robust” with more favourable sporting results bar Australia, improved staking position in UK retail and good growth in digital sports book although gaming more muted.

“Our full year EBITDA estimates of £440m (PBT: £266m; EPS: 11.8p) looks well positioned given the strength of the first half and further synergy benefits to come through.”