High street bookmaking giant Ladbrokes has warned it expects first-half profit from its digital division to be “around half” what it was a year ago.
The bookmaker had previously stated that it expected digital profits to decline year-over-year due to increased investment in technology and marketing and the costs of entering new regulated markets.
However, CEO Richard Glynn said in a statement prepared for this afternoon’s investor and analyst day that the drop-off had been exacerbated by a weak sportsbook margin in the second quarter and delays in the delivery of key technology projects, meaning profits would “be down further than anticipated at around half that delivered in H1 2011.”
The bookmaker pledged early last year to spend £50m over two years on upgrading its online technology, aimed at revitalising the online business and bridging the gap to high street rivals William Hill and Paddy Power. Ladbrokes online revenue was up 5.9% in the first three months of this year, compared to 33% for Hill’s and 28% for Paddy Power.
Ladbrokes also made approaches for pure online businesses 888 and Sportingbet last year, but failed to agree on price for the former and walked away from the latter due to regulatory worries over the latter’s Turkish-language business, Superbahis.
Glynn however added that this weakness in the online business during the six months to 31 June would be offset by a better-than-expected performance from the retail shops estate, enabling the business as a whole to meet market expectations.
He added that the board remained “confident” that the ongoing development of its online business would enable it to grow profits from this area of the business “in 2014 and beyond.”
Ladbrokes will publish its half-year results on 2 August.
