UK bookmaker Ladbrokes experienced a significant slowdown in gaming machine revenue in the first half of the year.
The company’s group net revenue was up 6.4 per cent to £563m when adjusted to reflect change in machine taxation from VAT to Machine Games Duty, yet operating profit fell 19.8 per cent to £85.7m.
The growth in machines has been a “major contributor” to retail profit over the past three years, the company said. While a slowdown in the rate of machine growth was “inevitable,” it noted that the first half of the year saw a greater reduction than expected.
During the first six months of the year, machine gross win grew 3.2 per cent due to the addition of more cabinets. Machine gross win per shop per week was down under one per cent over the period; the end of the second quarter saw a more marked decline. This was attributed to a prolonged period of hot weather across the UK.
Although the company has a number of machine initiatives planned for the rest of the year, it admitted that it is unlikely to see like-for-like growth in the second half.
“Having established a position of market leadership in machines, with like-for-like revenue increasing by around 40 per cent in the last three years, we always planned for a slowdown this year,” said chief executive Richard Glynn, adding that the company continues to “compete strongly” within the market.
“Machine performance has, however, been inconsistent in 2013 and the market rate of growth slower than expected with positive trends towards the end of Q1 not maintained during Q2, which was more variable. Following a decline in June, prolonged hot weather in July severely impacted trading.
“Although recent weaknesses appears to have been influenced by one-off factors, the July weather has exacerbated the volatility we were already experiencing, making underlying trends difficult to indentify.”
The company expects to see a “positive machines contribution” from new shop openings and increased density, but is no longer planning for like-for-like growth, he said.
