* Ladbrokes sees operating profit at bottom of range
* Online gaming, horse racing disappoint
* Shares down 8 percent after unscheduled update
By Keith Weir
LONDON, April 15 Ladbrokes, Britain's
second largest bookmaker, warned investors it expected annual
operating profit to fall this year after a poor performance from
horse racing and online gaming in the first quarter.
Ladbrokes shares fell eight percent after the unscheduled
trading statement, which dashed expectations that the company
was turning itself around after problems with its online
operations last year.
Ladbrokes has fallen behind market leader William Hill
, which has built up a head of steam in the growing
online gambling sector and expanded overseas. It also faces
competition from a number of new entrants in a crowded sector
ripe for consolidation.
Private equity firm CVC said on Monday it was considering a
takeover of online betting exchange Betfair, one of
Ladbrokes' rivals for online gamblers' cash.
Ladbrokes still operates more than 2,000 betting shops in
Britain and Chief Executive Richard Glynn said that conditions
on the British high street were very difficult as the economy
"The trading environment and economic conditions since the
start of the year have remained challenging, which when combined
with a number of specific one-off factors in the latter part of
the period, have driven a softer first quarter than expected,"
Glynn said in a statement.
The company had expected first quarter profits to be lower
than last year because of increased costs and the imposition of
a new 20 percent machine games duty in its high street shops.
However, revenue from machines and online gaming still proved
Paying out on a number of favourites at Cheltenham and a
number of race cancellations elsewhere this spring have further
Ladbrokes said operating profit fell to 37.4 million pounds
($57.5 million) in the three months to March, down 13 million
It forecast an annual operating profit at the bottom of
market forecasts which would mean a figure of around 188 million
pounds. That compares with 206 million pounds in 2012.
Analysts said Ladbrokes had work to do to match William
Hill, which is due to publish its first-quarter trading
statement on Friday.
"With retail trading flat at best and limited momentum
online, Ladbrokes appears much more at the risk of sporting
results than its closest peer William Hill," Shore Capital said
in a research note.
Ladbroke shares have performed strongly in recent months on
signs that it was getting its online strategy right after
profits in its digital division halved in the first six months
It last month agreed a partnership with Playtech,
the software company that is exiting a successful online joint
venture with market leader William Hill.
It also agreed a 30 million euro ($39.3 million) deal to buy
Betdaq, a smaller rival to Betfair.
Ladbrokes expects online revenues to suffer some impact from
changes linked to the Playtech partnership before the full
benefits are felt in 2014.
"There is going to be an integration hurdle over the next
6-9 months," said Glynn, adding that the company was now in a
"stronger place" thanks to recent deals.