Tabcorp: First-Half 2014 Results Show Ongoing Shift to Digital Distribution

Narrow moat-rated Tabcorp Holdings reported first half-fiscal 2014 results broadly in line with consensus expectations. Underlying earnings before interest tax depreciation and amortisation, or EBITDA, rose 5% to AUD 244 million. Underlying net profit after tax was up 4%, to AUD 75 million. The results highlight the slightly lower short-term earnings risk of Tabcorp's wagering business relative to other gaming segments, such as casinos. This is not to ignore the longer term structural challenges facing Tabcorp's wagering operations, in particular customer preferences shifting from retail to digital distribution channels. Digital platforms, including Mobile and Online, reduce barriers to entry and have encouraged large offshore competitors to enter the market.