Ladbrokes boss Richard Glynn under pressure after profits slump
Tuesday 25 February 2014
Beleaguered Ladbrokes boss Richard Glynn insisted he had the backing of major investors today despite more profit pain as he races to revive the business in time for the World Cup.
The chief executive, under pressure after a succession of profit warnings, said he was “fully confident” that he would be in the job in 2017 when the bookmaker’s deal with Israeli software firm Playtech to improve its online business expires.
Refusing to comment on reports he had been given a six-month deadline to save his job, he said: “When I’ve spoken to shareholders they realise the shape of the business and where the growth is coming from. The vast majority of shareholders understand the path the business is on. I am fully confident I will be speaking to you at the end of the Playtech deal in 2017.”
Glynn’s comments came as the shares, down almost 20% this year, lost another 1%, or 2.25p, to 148.75p. Full-year operating profits were off a third to £138.3 million as profits from its UK retail arm, its largest division, sank 26% and digital profits collapsed 74%. Glynn promised to hold the dividend at 8.9p this year.
Ladbrokes said first-half profits would be below last year as it completes the rollout of new gaming machines across shops and makes the transition to Playtech software, which will give gambling and sports betting customers a single online wallet. The firm, along with rival bookmakers, has endured a nightmare start to the year as punters cleaned up on favourable football and horse racing results, which has cost it £11 million.
The World Cup, a huge draw to attract new punters, will involve increased marketing outlay as well as the looming point-of-consumption tax in December. This means bookies who moved online businesses to low-tax destinations will now pay tax on where bets are placed. This will knock £2 million off Ladbrokes’ digital profits this year. Punters pumped £11.7 billion into the bookie’s gaming machines last year, leaving £422 million. But these machines face the threat of regulation.
Peel Hunt analyst Nick Batram said: “Much is hanging on the new relationship with Playtech. UK retail has the uncertainty of machine regulation and a poor run of sports results.
“Whilst many will take the view that things can’t possibly get worse, this underestimates the task at hand.”
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