Tabcorp is something of a ‘flavour of the month’ at the moment because of a number of bidders are sniffing around the ageing gambling giant.
Yesterday’s half-year results and net profit provided a solid hint as to what lies behind that current popularity with a 7% slide in profit despite a surge in online betting and growth in its lotteries business.
COVID and the lockdowns have made a mess of the company’s current strategy and others feel they could do better.
The reason for the weakness was the impact of the lockdowns caused by COVID-19 which shut many of the companies of its retail betting outlets, or restricted patronage of those that were able to remain open.
Tabcorp reported a net profit of $185 million for the six months ended December 31, down from the $199 million in the same period a year earlier.
Retail wagering turnover slumped 28%, which was offset by a 43% jump online punting.
That saw total revenue from Tabcorp’s wagering and media business edge up 0.8% in the half while earnings were down 3%
Tabcorp’s lotteries business saw a 1.6% rise in revenue and earnings were up 4.9%.
Total revenue fell 1.5% to $2.87 billion for the half year.
“COVID-19 has clearly demonstrated the importance of serving customers with a seamless, multi-channel experience,” Tabcorp CEO David Attenborough said in the earnings statement.
“Investments made to modernise our digital offering in recent years drove significant benefits.”
Tabcorp also resumed paying dividends, announcing a 7.5 cents a share interim payout
Speculation about Tabcorp’s future has been high after global wagering giant Entain, which owns Ladbrokes, offered to buy its underperforming TAB wagering for a speculated $3 billion and US private equity outfit Apollo also lobbed a bid.
The offers would see Tabcorp broken up with the listed entity retaining only the booming lotteries arm, which it acquired three years ago through an $11 billion merger with the Tatts Group.
The moderate result will only increase pressure on the company, even though it says it has nearly $100 million in cost cuts planned.
The shares eased 1.15 to $4.41. Not a positive result for the under-pressure company.
