Ladbrokes’ costly failure to deliver its new online platform on time is a “delay not a derailment” of the company’s digital strategy, Ladbrokes CEO Richard Glynn told investors this morning.
The UK’s second largest bookmaker this morning confirmed a near halving of online profit in the first half of 2012 to £15m, 49.5% down on the £29.7m delivered in the comparative period a year earlier, and dwarfed by the £68.9m delivered by William Hill last week. Ladbrokes’ rival has pursued the strategy of entering an JV with Playtech to revive its online division, rather than spend £50m on rebuilding all of its technology platforms as Ladbrokes is doing.
Ladbrokes said today that expected lower profits due to the cost of investment in rebuilding the company’s digital platforms and entering new regulated markets in Europe had been exacerbated by a weak sportsbook margin in Q2 and “delays in several key pieces of technology”, namely the failure to launch its new website ahead of the Euro 2012 in June, a decision Glynn called “unpalatable”.
Glynn admitted this morning in the company’s H1 earnings call that “we have perhaps not executed as efficiently as we otherwise ought to have done”, and that “delays in delivery inevitably impacted our ability to drive NGR in H1 and will probably do more so in H2.”
However, coining a phrase he used on at least three occasions during the call, Glynn told: “We’ve had a delay, but it’s not a derailment. We’ve delivered an awful lot. We’ve undertaken a significant change programme. There’s more to do, but we will deliver it.”
Among the successes, according to Glynn, were the advances in in-play betting, which put the company on track to double the number of events it offered last year to 60,000 by the end of 2012. “From being a laggard in bet in play in 2010, we are now perceived as a market leader,” argued Glynn, who also highlighted that “[m]obile revenues continue to grow at about 107% year on year.”
He said he was “confident the first sportsbook iteration will be delivered in Q4 2012” and that the company was “taking concerted action [to] ensure that digital delivery gets back on track” in the wake of product director Richard Ames’ sacking earlier this week.
Glynn said: “We have relieved some operational pressure on [director of channels] Nick Rust, so he can take full P&L responsibility for retail and digital, in both the UK and Ireland.” CTO Mark Grimes had also been moved onto the company’s executive committee said Glynn: “That ensures increased focus, senior level security on a day-by-day basis on technology delivery.” Damian Cope, who recently joined Lads from Gala Coral, will oversee the profit and loss of the international businesses.
The company’s catastrophic digital performance was however offset by a 21% year-on-year increase in operating profit from the company’s UK shops division, allowing the Group to post a 48.9% rise in pre-tax profit to £106.9m from £71.8m a year earlier.