BOOKMAKER Ladbrokes today said profits were down 58% after it suffered a barren start to the English Premier League football season.
The slide in operating profits to £22.4 million for the three months to September 30 comes after a winning start to the season by Chelsea and Manchester United and the low incidence of draws - the bookies’ favourite result.
The update on trading emerged as Ladbrokes announced plans to raise £275 million from investors in a bid to reduce its debt position.
Ladbrokes said just four - or 6% - of the first 66 games of the season ended in draws, compared with the five-season average of 25%. Bookies prefer draws because punters tend to place wagers on winning results.
Firms have also been hammered by a run of wins for the league’s most heavily-backed teams, as Chelsea and Manchester United secured victories in all but one of their seven league games in the period up to the end of September.
Ladbrokes chief executive Chris Bell said poor margins in horse racing and the weak economic environment also affected the company’s profitability.
The tough trading conditions have led the company to step up cost saving efforts, including through a salary freeze until January 2011 and the withdrawal of its full-year dividend payment to shareholders.
Ladbrokes said revenues declined 15% in its UK retail business, although the 3% decline in over-the-counter bets was better than expected. The gross win margin, representing the amount left by losing punters, fell to 14% from 17.5% in the same period a year earlier.
The company, which has more than 2,000 betting shops in the UK, said the proposed issue of new shares would place it in a stronger position when it came to refinancing its remaining debt.
Net debt stood at £962 million at June 30, but this could fall to £687 million as a result of the rights issue, Ladbrokes added.
Mr Bell said: "Ladbrokes continues to be a profitable and cash-generative business with strong positions in markets that remain attractive."
Ladbrokes shares opened 8% lower following today’s announcements.