28th Aug 2014 10:36
LONDON (Alliance News) - Irish bookmaker Paddy Power PLC Thursday posted a sharp drop in first half profit, despite strong revenue growth driven by mobile and online, as similar to its peers the betting firm failed to recover from big pay-outs earlier in the year.
However Paddy Power still said it is expecting double digit growth in earnings in the full year.
The betting firm said it has started the second half of the year well, as it benefits from good top-line growth and favourable sports results, leaving it confident in its outlook for the remainder of 2014 and going forward.
"The second half has started well with good stakes growth and a rebound in sports results. At this juncture, we expect mid-teen percentage growth in EPS [earnings per share] for the full year, despite an EUR11 million headwind from product fees, new taxes and currency translation," said Chief Executive Patrick Kennedy in a statement Thursday.
Paddy Power raised its interim dividend by 11% to 50.0 euro cents per share, and said a strong start to the second half has seen group net revenue up 45%, or up 28% excluding World Cup net revenue. The company said it also intends to recommence share buybacks.
Paddy Power recorded a pretax profit of EUR61.6 million for the six months to June 30, down 20% on a reported basis and 14% at constant currency on the EUR77.0 million profit in the first half of 2013, after "punter friendly results" wiped off EUR34 million of its profit.
Paddy Power said football betters, and particularly accumulator betters, had "dream weekends" in January and March. Football results went heavily against the company and an unusually high number of favourites won their football matches, in what Paddy Power said was its "worst two weekends ever for football profitability".
"The punter-friendly results in football and racing which impacted the gross win percentage in the initial six months of 2014 failed to put a halt to our gallop with strong underlying performance and accelerating top line momentum delivered in the period," said Kennedy.
The company said it got a much welcome boost from the football World Cup, which started in June and ended mid-July, during which it said it gained very strong brand exposure and boosted the number of online customers.
Paddy Power said net revenue in the period was EUR396.5 million, compared with EUR380.6 million last year, up 4% on a reported basis and 7% at constant exchange rates.
Its said revenue was driven by customer acquisitions and an increase in the amounts staked, particularly online.
"We acquired more new sportsbook customers on paddypower.com in these six months than in all of 2013. We had a cracking World Cup which generated stakes of almost EUR200 million, 130% ahead of the previous tournament. Australia continues to power ahead, and Italy has made significant progress," Kennedy added.
Paddy Power said that in the second half to date, favourable sports results have had a positive gross impact of EUR11 million.
Mobile - an area the company said it sees as "exceptional growth potential" and something it intends to continue to exploit - accounted for 52% of the group's online revenue in the first half.
The betting firm said its UK and Irish online business saw the benefits of increased investment in television advertising, online marketing and product innovation.
Profits in its UK and Irish retail business were driven by new shops and ongoing revenue growth across the existing estate, Paddy Power said, while its Australian online business continued to perform strongly. It said it is making good progress in Italy.
Paddy Power shares were trading 1.2% lower Thursday mid-morning, at EUR48.92 per share.
By Rowena Harris-Doughty; [email protected]; @rharrisdoughty
Copyright 2014 Alliance News Limited. All Rights Reserved.
Related Shares:
PAP.L