Ladbrokes shares fall after online profits warning
- 26 September 2013
- From the section Business
The betting company Ladbrokes has warned that profit will fall short of expectations because of a disappointing performance in its online business.
Profits for its online arm will be in the range of £10-14m this year, far short of the £27.5m which had been expected, the company said in a statement.
Shares fell 10% on the news in early trading in London.
Ladbrokes has already issued one profits warning this year.
Chief executive Richard Glynn said that conditions had been "challenging"
Last month the company reported a steep decline in profits, as a slowdown in gaming machine revenues dented its figures.
Pre-tax profits for the first six months of 2013 were down 49% from the same period last year, falling to £55.1m,
In the latest trading update, which was brought forward from next month, Mr Glynn said: "Our digital earnings have been disappointing reflecting a lack of competitiveness in sportsbook, lower margins than planned, and a greater disruptive impact than expected from the transition necessary to grow digital for the long term".
Ladbrokes is Britain's second largest bookmaker and has over 2,500 High Street shops. It has recently announced a collaboration with online gaming software provider Playtech, in a bid to boost its digital presence.
Elsewhere the company reported that trading in betting shops had improved, with football bets and over the counter stakes picking up.
Richard Hunter head of equities at Hargreaves Lansdown stockbrokers said that while the share price drop was "severe", the company's share price hasn't performed well recently. It has increased by only 1% over the past year, while rival bookmaker William Hill has seen its shares rise by 36% in the same period.
"This space is very competitive, and previously high hopes for the gambling sector as far as online was concerned have been dashed in recent years. There is still nervousness around digital because of the regulatory atmosphere in the US."
In 2006 the US Unlawful Internet Gambling Enforcement Act (UIGEA) effectively banned US citizens from gambling online, forcing many firms to quit the lucrative US market.