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Tabcorp profits slump, but exceed expectations

Thu, Aug 4, 11:03am by Staff Writer

Australian wagering behemoth Tabcorp has announced a 49 per cent slump in profits, but the result exceeded market expectations.

The company released its FY16 results on Thursday confirming a statutory net profit had weakened to $169.7m, while group’s underlying earnings, which remove the impact of significant items, jumped 8.4 per cent to $185.9m.

That was slightly better than expectations, as the ASX-listed company battled variable conditions in its core wagering business, which is dominated by the TAB.

Chief executive David Attenborough said the TAB had lifted its performance in the second half of the financial year.

“Our Wagering and Media business grew in FY16, benefiting from TAB’s multi-channel distribution model and the integration with the Sky media business,” he said.

“Momentum improved across the year, with trends in the second half stronger than the first half.”

As an indication of the volatile and changing nature of the wagering business, overall retail turnover was down 1.1%, digital turnover rose 12%, turnover on fixed odds rose 16%, while overall totalisator turnover was down 4.4%.

Significantly for punters, with 65 per cent of digital turnover coming via mobile, Tabcorp has confirmed it will launch a new app design for its mobile smartphone digital app in time for the popular spring horse racing carnival.

The earning announcement comes in the same week that Tabcorp also announced it was launching a takeover bid for ASX-listed gaming technology group INTECQ.

The $128 million deal would strengthen Tabcorp’s gaming services division and would further fuel discussion around a possible merger with the Tatts Group.

Tatts announced Wednesday it was buying the local gaming monitoring operations of Greek wagering business Intralot.

According to the Australian Financial Review, the acquisition will build speculation that Tatts and Tabcorp may seek a merger, as they did in 2015.

On that occasion, discussions failed to progress, but with increasing competition in the gaming and wagering sector, both companies look to positioning themselves for another shot at a deal.


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