Tabcorp earnings fall short of expectations

Australian operator Tabcorp has reported a decline in earnings and profits from its wagering division. The operator’s share price fell 4% on the back of the news.

Finance graph

Digital divisions continue to perform strongly despite projected earnings being missed. © Pexels.

Earnings from the wagering division were down 4% for H1 2019 at AU$159.6m, missing the projected expected amount by $12m. Group profits were also short of expectations at $210.6m, despite being over double the amount taken a year back.

However, the group’s digital division performed much better. Digital grew by 11.6% to $2.6bn on the year.

Tabcorp continues to integrate the business of Tatts Group after the 2017 merger and insists it is “playing the long game” through increased marketing efforts to attract new customers. Those increased advertising costs and promotional offers go someway to explaining the lower earnings, along with general underperformance of many of its retail outlets.

The Melbourne operator has increased its active customer base by 6.7%, showing that the strategy does appear to be working.

Speaking about the results, David Attenborough, Tabcorp managing director and CEO, said:

We have created a sustainable and diversified gambling entertainment company, with the scale to invest and grow. Our focus is on ensuring a strong and aligned risk-aware and performance culture centred around our new purpose of ‘Excitement with Integrity’. Tabcorp is well positioned for 2019 and beyond.David Attenborough, Tabcorp managing director and CEO

Tabcorp has a privileged position in Australia, where it holds an exclusive retail licence in most states, though it does pay more tax than online competitors. However, international operators are looking to level the playing field.

Paddy Power Betfair (PPB) has written to the Victoria government to make a case for allowing multiple operators to run betting shops in the state. PPB’s Australian arm, Sportsbet, is thought to be one of three major operators than are set to bid for the licence, which Tabcorp holds until 2021. PPB claims that multiple licencees would bring a better and fairer experience to customers in the region.

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