Tabcorp shares slumped as much as five per cent today despite reporting underlying earnings for the year that were slightly ahead of market expectations.
The gambling operator spooked the market, sending shares down as much as 5.1 per cent to $3.14, with an outlook that flagged higher costs and lower-than-expected earnings from its core wagering business.
Deutsche Bank analyst Mark Wilson said the end of licensing arrangements guidance is negative, referring to the termination of Tabcorp’s poker machine licence in Victoria next week will leave it with $17 million of corporate and IT costs to be allocated across the continuing business.
‘‘The company has guided to pro forma wagering earnings of $150 million, which compares to our FY14 forecast of $190 million,’’ Mr Wilson said, while adding that racefields product fees appear to be higher.
The group’s net profit fell to $340 million in the year to June 30, from $534.8 million in 2010/11, as a result of the demerger of its casinos business in 2011.
Based on continuing operations the net profit result was 12.7 per cent higher than the $301.6 million recorded in 2011/12, thanks to underlying earnings growth and lower interest expenses following the demerger.
‘‘Tabcorp’s continuing businesses have started the year with good momentum and will benefit from a number of valuable growth opportunities in FY13, such as the new Victorian Keno business and TGS (Tabcorp Gaming Solutions),’’ said Tabcorp chief executive David Attenborough.
In 2011/12, Tabcorp’s online wagering operations generated $2.16 billion in turnover, growing by 14.5 per cent compared to the prior year.
Fixed odds revenues were the highlight, growing by 41.5 per cent to $321.4 million.Totalisator revenues continued to decline as the market shifted to fixed odds betting.
The animated racing game, Trackside, also grew strongly, with revenue rising 65.6 per cent to $82.3 million, driven by its expansion in NSW and continued growth in Victoria.
Betting turnover via call centres was down 6.8 per cent, and on-course betting was down 6.3 per cent.
Mr Attenborough said online growth was a natural progression as customers migrated away from using traditional call centres.
On-course betting was falling despite good attendances at race meetings because many punters preferred to watch and bet on races with their friends at their local TAB outlet.
‘‘Over 20 per cent of online turnover is now being placed through mobile devices,’’ Mr Attenborough said.
The company declared a final dividend of 11c per share full franked and said it targeted a dividend payout ratio of 80 per cent of net profit excluding the expected write-off of Victorian gaming goodwill in the first half.