TAH 3.29% $3.45 tabcorp holdings limited

yikes....massive loses

  1. 3,698 Posts.
    Horse flu will cost us $30m:
    October 29, 2007
    EQUINE influenza has cost gaming company Tabcorp $240 million in turnover and is expected to wipe about $30 million off pre-tax earnings this financial year.

    Chief executive Elmer Funke Kupper said the horse flu outbreak was not expected to delay his two-year turnaround strategy for the company, but it would hurt performance over the next six to 12 months.

    "From the day of the outbreak to today, we're down in the order of $240 million in turnover compared to last year, and of course more against targets that we'd set ourselves," he said during an interview on ABC Television's Inside Business.

    "If you translate that into profits, by the end of equine influenza, when it's all back to normal, we think it's about half a billion in turnover, which translates to about $30 million before tax."

    Mr Funke Kupper said Tabcorp had not considered taking legal action to recover the lost revenue, but may do so if the opportunity arose. "Personally I think it's difficult, but we'll take advice on that when the time comes," he said.

    Mr Funke Kupper, who was appointed chief executive in July, conceded shareholders were losing patience with the company's share price, which has failed to rebound significantly from the two-year low of $14.77 it plumbed in August.

    "I think it's fair to say that we've lost some credibility with our investors over the last couple of years because we haven't been performing," he said.

    The company had neglected customer service and underinvested, although the latter problem was being addressed through an investment program, including $300 million to be spent on its Star City casino in Sydney.

    "I think we've underinvested in our casinos by quite a material amount, so we've run them very, very profitably," he said.

    Expenses had also been allowed to blow out in recent years but Mr Funke Kupper has set a target of keeping cost growth in line with inflation except where it is offset by increasing revenues.

    "The reality about credibility is that when you lose it, it takes a little bit of time to build up, and in my experience it takes four half years of simply delivering on your promises for that to be regained," he said.

    Mr Funke Kupper said he would not pursue growth by acquisition, unlike his predecessor Matthew Slatter who engineered the purchase of Jupiters Casino group and TAB before being dumped by the Tabcorp board in March for poor performance.

    "I think in the last couple of years we probably spent too much time being internally focused as we integrated those businesses," Mr Funke Kupper said. "So our focus is on making our core businesses work better here in Australia."

    Tabcorp shares closed down 4c at $15.11 on Friday.

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