Tatts FY15 profit rises thanks to “great traction” in digital operations

tatts-ubet-profitsAustralian betting and lottery operator Tatts Group saw profit rise 13% in its most recent fiscal year thanks in part to “great traction” at its online betting operations.

Revenue and earnings were each up a mere 1.8% to A$2.9b (US $1.6b) and A$507.4m respectively in the 12 months ending June 30, but profit from continuing operations rose 13% to A$255.6m. The gains came despite the “heavy lifting” associated with the April 30 rebrand of Tatts’ retail and online wagering business as UBET.

Tatts CEO Robbie Cooke said the initial response to the UBET brand had been “very pleasing” and the company was now “well positioned to start fighting back in this highly competitive space.” Cooke said the firm had for the first time embarked on “rapid prototyping.” Among the products being tested in the field is UBET Live, “an innovative in-venue in-play betting module.”

Overall wagering revenue fell 1.5% to A$633m, which Tatts blamed on decreased marketing activity prior to its rebrand. But online wagering revenue was up 12.5% and Tatts now earns 25.7% of wagering revenue via digital channels, up from 22.9% a year ago. Prior to the rebrand, the Tatts.com app more than doubled its FY14 download figure to 735k devices.

Tatts’ mainstay lottery operations had a “record-beating” year, with sales up 2.8% to A$1.98b while earnings rose 5.9% to an unprecedented A$287.5m despite a significant decline in the number of mega-jackpots on offer. Online lottery sales surged 20.9% year-on-year, with digital’s share of total lottery sales rising 1.7 points to 11.1%.

All three of Tatts’ gaming divisions made ‘positive contributions” to the bottom line last year. Gaming venue services business Maxgaming’s earnings rose 2.4% to A$51.3m, while the UK-based Talarius slot machine operation was up 20.3% to A$16.4m and the Bytecraft machine services unit returned to positivity, earning A$2.8m versus a A$400k loss last year.

Cooke said FY16 had started strong thanks to a significant uptick in lottery jackpots of A$15m or higher. The wagering division is at the start of a “24-month journey” to make the new UBET brand a household name. While Tatts has no illusions that Australia’s fiercely competitive online betting market will soften anytime soon, it plans to actively market through traditional media, online and via affiliate deals.