Cantillon: Ladbrokes faces uphill struggle in Ireland

Bookmaker’s trading companies are in examinership but competitors are the big issue

Newly appointed Ladbrokes chief executive Jim Mullen is bringing forward a strategic review of the listed bookmaker's operations following a set of quarterly results that did not make him happy.

Earnings before tax, interest and one-off charges were £14.3 million in the first three months of the year, compared with £18.4 million during the same period in 2014. Extra betting duty in the UK didn’t help, but Mullen said he was not going to hide behind that and told the local media he felt the performance was disappointing.

Mullen took on the top job only last month. He originally joined Ladbrokes about 18 months ago from rival William Hill, where he led the development of that group’s digital betting business, helping it to gain several lengths on his current employer.

His first major challenge is likely to come from the Republic, where this week the chain had the High Court place its three trading companies in examinership. The process is likely to see it cut 250 jobs and close 60 odd betting shops.

If the High Court agrees to confirm Ken Fennell’s appointment next Friday, then the examinership could run for the full 100 days.

This would mean Mullen should have something definitive to say to investors about the Republic when Ladbrokes publishes its interims in August. On that basis he is presumably hoping that everything goes to plan.

Even if it does, Ladbrokes still faces a challenges in this market. It has been having a tough time competing on the ground here. Planning and licensing laws mean that even comparatively small population centres could have three, four or five bookie shops: Ladbrokes, its two big rivals, Boylesports and Paddy Power, and possibly one or two independents.

In both Britain and Northern Ireland, different regulations mean it faces less competition and is also allowed to have up to two gaming machines, known as fixed-odds betting terminals, in each shop. These deliver extra revenue and profits.

The examinership may deal with the costs issue in the Republic, but it is unlikely to make the competitive challenges disappear and it is dealing with them that will ensure the bookie stays here in the long term.