Ladbrokes Coral set to hit full-year targets after ‘strong’ H1

Ladbrokes Coral Group says it is on track to reach its full-year financial goals after reporting a “strong performance” in the first six months of the year.

Total group net revenue was up 1% on a year-on-year basis during the first half, while the firm has estimated that operating profit for the period should amount to between £153.3m (€171.5m/$201.4m) and £158.3m – either 4% or 7% ahead of last year.

Digital net revenue in the opening six months of 2017 jumped 17% year-on-year, while sports net revenue also climbed 25%, with sports stakes up 23%.

Gaming net revenue was 11% ahead of the first half of last year and also 15% ahead in the sportsbook-led brands.

In terms of the Ladbrokes Coral retail business, the UK Retail operation was hit by a 6% drop in net revenue, with over-the-counter (OTC) revenue falling 11% and stakes down 7%.

Ladbrokes Coral said that the decline in OTC stakes was due to the “successful structural improvement in the Ladbrokes Retail OTC horse racing gross win margin and the savings in media costs from not showing certain racecourse content”.

The company said this has improved retail profitability and adjusting the figures resulted in underlying like-for-like OTC stakes that were 5% behind last year.

Elsewhere, the European Retail business saw net revenue drop by 1%, and while stakes increased 17%, the firm said that poor football results in Italy meant OTC gross win margin was 14.8%, 3.6pp behind last year.

As a result of its performance in H1, Ladbrokes Coral has increased its synergy guidance from £100m to £150m.

The company said this was driven primarily by “cost savings identified through procurement, IT and the harmonising of horse racing gross win margins across the UK Retail brands”.

The annualised phasing of the delivery of the £150m synergies is expected to be approximately £45m in 2017, £130m next year and £150m in 2019, with costs to achieve of between 1.1 – 1.15x fully matured synergies.

Jim Mullen, chief executive of Ladbrokes Coral, said: “Ladbrokes Coral posted a strong performance in H1 with results in line with our expectations and another significant upgrade to synergies, which at £150m will now be well over double the level initially announced.

“Digital has performed well, with net revenue growth of 17% particularly pleasing against a backdrop of a significant period of platform integration and a competitive trading environment.

“In UK Retail, a key management focus has been on addressing some areas of ongoing inflationary pressure on the cost base and on improving gross win margins.

“On integration, we have successfully migrated our UK Digital brands to a single platform and completed the consolidation of our head office team.”

Mullen added: “The further synergies identified re-emphasise the merits of the merger and the potential of the enlarged group, with the additional savings delivered in 2017 offsetting the impact of current UK Retail run rates.

“We therefore remain in line with our expectations for the full year.”

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