Festival keeps Ladbrokes on track

LadbrokesA good run of results at the Cheltenham racing festival and the popularity of gambling machines helped Ladbrokes toast a rise in profits.

The UK's second biggest bookmaker said revenues at its 2,000-strong shop estate were up 9% in first three months of 2012, boosted by a 22% rise in machine revenues and a resilient demand for over-the-counter bets.
Operating profits rose 3.9% to £50.4 million as its gross win margin was higher than normal, helped by more punters losing at Cheltenham.

Its digital business saw growth of 5.9% but profits were down as a result of its two-year £50 million investment programme to help it catch up with online rivals.

The firm has pulled out of talks to buy online 888 and Sportingbet in recent months and has recently vowed to turn around its struggling poker division.

Chief executive Richard Glynn said the investment was starting to pay off, with the UK online sportsbook up 22%, and remained confident the business would see profits growth in the second half of 2012.

Shares rose 5% after the update. Ivor Jones, an analyst at Numis Securities, said online momentum was "building nicely" as the investment started to pay off.

There was strong growth in the number of people signing up to its website, while bets placed from mobile phones accounted for 20% of its sportsbook and it was the market leader in people betting in-play on football matches.

But other parts of the online business continued to struggle, with net revenues at its poker business suffering a 27% decline and casino revenues 5% lower.

Mr Jones added that the 9% growth in UK retail net revenues was a "a good result" given the rise in the number of race meets cancelled by bad weather. But he believes revenues growth will start to slow as Ladbrokes comes up against strong figures from the previous year when it introduced new machines.

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