No profit for bookmaker despite Irish recovery

The economic recovery has so far failed to generate a positive bounce in the fortunes of Ladbrokes here, with increased competition in the betting market contributing to a 60% annualised drop in its Irish profits in the first half of the year.

As part of its first-half group results, published yesterday, the British betting services giant said operating profits for its Irish operations amounted to £2.5m (€3.14m), down 60.3% on the £6.3m figure it reported for the first six months of 2013.

Furthermore, the amount Ladbrokes Ireland won — on a gross basis — from punters’ losing bets was down by 12%, year-on-year, at £37.5m.

“Ireland is coming out of a recession, with positive signs of economic recovery. However, we have seen a decline because of the highly competitive environment in the Republic of Ireland,” Ladbrokes said in its interim statement yesterday.

Of the near 300 shops the company operates on the island of Ireland, 216 are located in the Republic.

The first half also saw a near 7% annualised drop in the amount of money staked over-the-counter by Irish punters in Ladbrokes shops — falling from £265.2m to £247.3m.

Overall, net revenue for the group’s Irish business fell by 10.4%, year-on-year, to £37m.

The company did, however, lower its Irish costs — by 0.7% to £30.5m — on the back of “shop scheduling improvements” and a reduction in head office and property costs.

In its Ireland commentary, Ladbrokes said: “The first half of 2014 — especially the first quarter — was impacted by unfavourable football results and this was compounded by a high percentage of winning favourites at major racing festivals.”

Irish brokers aren’t overly excited about the Ladbrokes stock, at present, with Davy rating it as an “underperform” and suggesting current dividend levels are unsustainable. Goodbody is still carrying a “sell” recommendation.

“We continue to prefer names elsewhere in the sector,” Goodbody’s Gavin Kelleher said in a note.