Business Irish

Saturday 23 September 2017

Paddy Power Betfair back to winning ways after strong Euro 2016

Ronaldo celebrates after Portugal wins Euro 2016 in Paris
Ronaldo celebrates after Portugal wins Euro 2016 in Paris
Michael Cogley

Michael Cogley

A strong end to Euro 2016 has helped betting giant Paddy Power Betfair (PPB) regain some of the ground lost through a disastrous Cheltenham this year.

The recently merged entity reported revenue of £404m (€454m) in the three months to the end of September, up 25pc on the same period last year.

The surge in income was driven largely by strong growth in the company's sportsbook stakes, up 26pc. PPB benefited by £28m from the weak sterling when non-UK revenues were translated across.

Elsewhere earning before interest tax depreciation and amortisation (EBITDA) rose by 53pc to £113m.

The strong quarter has caused the company to up its earnings target for the year to between £390m and £405m. The betting firm also posted a 68pc increase in its underlying operating profit for the period, up to £95m.

PPB chief executive Breon Corcoran said it was another good period for the business.

"We are continuing to focus on building a stronger combined operation by exploiting the unique assets and capabilities of each legacy business, and on using our scale to better serve our customers," he said.

Paddy Power and Betfair began trading as a single entity in February and the company has been tasked with delivering £65m of annual savings. That process is ahead of schedule and PPB expects £25m of synergy benefits this year, £5m more than was originally forecast.

"Work is under way to combine the best of Betfair and Paddy Power's technology into a multi-brand, multi-channel, multi-jurisdictional platform that will start to unlock the full potential of the group's scale and will lead to increased pace of development and faster roll out of new products," Mr Corcoran said.

Goodbody analyst Gavin Kelleher said yesterday's trading update was positive but warned on the unpredictability of sporting results.

"Reading too much into individual quarters can be misleading given sporting results volatility and seasonality of marketing spend," he said.

"However, the performance of the enlarged group thus far gives us renewed confidence in our positive investment case we outlined at the time the merger completed."

Davy analyst David Jennings said PPB's decision to up its earnings target will be the first of many. "We have spent much of this year emphasising the operating leverage potential of this newly merged company only to find that this potential was being overshadowed by a combination of adverse regulatory changes in Australia, an admittedly disappointing H1 earnings outcome in Australia and the general sell-off in the sector driven by regulatory concerns in the UK," he said.

Shares in the betting giant were up by as much as 4.5pc at 1.30pm yesterday, rising to £89.2 (€100.5).

The share price has continued to stabilise after Britain's vote to leave the EU in June. PPB, along with many others experienced a major hit in share price following the referendum.

Irish Independent

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