Centrebet Loses Profits

Centrebet an Australian internet bookmaker warned that its full-year net profit will be halved to AU$8m. It indicated a brave tactical plan meant at doubling its share in 2015 to 20% of the Australian corporate bookmaking market.

Ladbrokes released a 24-page document to the Australian Stock Exchange, aptly name Project Rocket: “Business dynamics are constructive given current deregulation in marketing, continued migration from land-based TABs to internet and increased barriers to entry. In order to take advantage of these circumstances Centrebet is advantageously placed.”

The Northern Territory-licensed bookmaker said in its statement that it aims to “achieve a circa 50% increase in net profit in conjunction with the status quo by FY 15, with net profit of circa AU$32m” through “Significantly increased brand marketing ventures, a new advertising campaign and to improve its new product development in Australia.”

However, as the investment spending increases so must our new customer base increase as well” starting this year will have “a short-term earnings impacts in spite of an increase in revenue, as new clients spawn a negative net input, on average, in their first year”, said the bookmaker.

Cash flow need to be maximised from Europe to focus investment on the higher return Australian market”, racing will be a dominant growth focus over the five-year plan. “In the racing market segment growth is very important and it’s critical to Centrebet gaining a 20% or greater market share of the Australian corporate bookmaking market by 2015.” Centrebet’s 5% market share of horse racing betting profits among corporate bookmakers is presently tails far behind its 24% share of sports betting.

Growth will also come from what Centrebet termed “Tier 1” bookmakers – itself, Sportingbet and Paddy Power-owned Sportsbet and IASBet – continuing to take market share from from “land-based TABs and Tier 2 operators,” such as Tabcorp-owned Luxbet, Betstar and Betezy, said the company.

The bookmaker is regularly linked with takeovers by Europe-facing operators who want to gain access into the highly lucrative fast-growing Australian market. Ladbrokes is one of three companies tendering for the Victorian wagering and gaming licence. Other operators competing for the same market share are William Hill and Bwin.

Graham Kelly who’s the chairman for Centrebet said that although the vendor “will continue to explore appropriate value adding valued opportunities, the strategy announced today indicates our intentions to realise Centrebet’s considerable potential to provide our shareholders value in the course of sustainable growth.”