Ladbrokes Advances as New Chief Executive Overhauls Managers, Suppliers
Ladbrokes Plc rose the most since May in London trading as the U.K. bookmaker’s new chief executive officer revamped his management team and announced supplier changes and cost cuts to boost underperforming units.
Ladbrokes climbed 4.9 percent. John O’Reilly, who was responsible for establishing Ladbrokes’ online business, will be leaving due to a “flatter executive board structure,” CEO Richard Glynn said in a statement today. The company named new managers for its digital channels and retail operations.
“We’ve found it hard to compete recently, so we’ve taken a long hard look at ourselves,” Glynn, who took over as chief in April, told analysts at a meeting today. Ladbrokes also announced a four-year contract with a new supplier, Global Draw Ltd., for gambling machines.
The bookmaker aims to boost its take from in-shop gambling machines and improve its Internet operations, which have been growing more slowly than competitors, to compensate for declining over-the-counter bets. Operating profit at its e- gaming unit rose 40 percent to 29.1 million pounds ($46.3 million) as the company cut costs by moving the unit to Gibraltar last year.
The company will also centralize marketing and shut some offices and move workers to its headquarters in Harrow, London, Glynn said.
Ladbrokes was up 6.8 pence to 145.5 pence at the 4:30 p.m. close in London. The shares have risen 5.8 percent this year, giving the company a market value of 1.3 billion pounds.
“With a new CEO, a machines announcement and some strong hires, there is an emerging story at Ladbrokes beyond simply being cheap,” wrote Nick Batram, an analyst at KBC Peel Hunt who has a “hold” recommendation on the shares.
Glynn said Ladbrokes intends to shut offices in Ruislip and South Ruislip, on the outskirts of London, by next year. He said it’s too early to quantify savings.
In March, Ladbrokes closed a call center in Liverpool, at the cost of 260 jobs, according to spokesman Ciaran O’Brien. The company employs about 15,000 people in the U.K.
Machine gross win increased 2.9 percent to 148 million pounds. The rollout with Global Draw will start in January.
“We’ve fallen behind in machines,” Glynn said. The company has deployed 24 regional managers to focus on machines.
First-half profit more than quadrupled as results included a 261.9 million-pound tax settlement. Net income rose to 321.8 million pounds from 74.7 million pounds a year earlier, the company said in a statement. Revenue dropped 11 percent to 500.2 million pounds.
Soccer’s World Cup tournament generated 26.8 million pounds in gross win, Finance Director Brian Wallace said. Gains from the tournament were “more than offset” by poor horse-racing results that included an above-average number of favorites winning at the Royal Ascot festival, the company said. William Hill Plc called the festival the worst in the company’s 76-year history.
Ladbrokes resumed paying dividends, declaring an interim payout of 3.85 pence today, after suspending them last October when profit dropped.