LONDON Feb 25 Britain's second-biggest
bookmaker, Ladbrokes, said operating profit would take a
hit in the first half of 2014 due to upgrades to its online
service, as it ended another troubled year with a sharp fall in
The company has struggled to keep pace with larger rival
William Hill and establish itself in a growing online
market, prompting a series of profit downgrades that have piled
pressure on Chief Executive Richard Glynn.
A familiar sight in Britain's town centres with 2,300 retail
outlets, Ladbrokes formed an alliance with software developer
Playtech last year to gain ground in serving the
growing number of gamblers who bet on sports events through
their computer, tablet or smartphone.
But switching its gaming products to a new system has taken
longer than expected.
Glynn said the group was now on track to deliver the upgrade
- which will allow its customers to have a single view of all
their upgraded online products in one "wallet" - in time for
June's soccer World Cup in Brazil.
Benefits of the digital changes, as well as from a rollout
of new betting machines in its revamped shops, would not be felt
until the second half of the year and beyond, the firm said.
First-half 2014 group operating profit would be down on the
85.7 million pounds ($143 million) posted a year before but
ahead of 52.6 million pounds posted for the second half of 2013.
Shares in the firm fell as much as 2 percent on the news,
made worse by a tough start to 2014 in which revenue from
January to Feb. 18 fell 11 million pounds on a year ago after
sporting results had so far favoured customers.
"What we need to look at from the business is sequential
improvement, we had our nadir in 2013 and I think sequentially
we are improving from then on," Glynn told Reuters.
"We enter 2014 confident in our ability to deliver the final
changes needed to establish a far more competitive offer."
Ladbrokes said annual operating profit for 2013 fell 33
percent to 138.3 million pounds, slightly below market forecasts
for 142 million. Profits from its UK retail business, its
largest division, fell 26 percent, hurt by a hot summer which
hit footfall, and were down 74 percent at its digital division.
The firm also said it would close 40 to 50 shops in 2014.
"Management has said that first half profit is expected to
be down year-on-year with sharp recovery in the second half
depending on the success of the transition to Playtech
technology. The finish line is a long way off," Numis analysts
said in a note, retaining a "Hold" rating.