Paddy Power rejects negative Davy report on prospects
PADDY Power chief executive Patrick Kennedy dismissed a recent Davy Stockbrokers report warning that the gambling firm's Italian foray won't come up trumps.
Speaking at Paddy Power's annual general meeting in Dublin yesterday, Mr Kennedy said that he disagreed with the report's findings.
Davy analysts downgraded Paddy Power stock from 'outperform' to 'underperform' last month.
The firm had the 'outperform' rating on Paddy Power since 2009. But analysts said they believed Paddy Power's core online business in Ireland and the UK is facing diminishing returns.
They also suggested that the company could face a longer payback time for its investment in the Italian market.
While the shares tumbled after the report was issued, they have since regained much of the lost ground.
Mr Kennedy insisted the fundamentals of the Italian market are attractive and that its size, increasing broadband penetration, smart device roll-out and social media will underpin growth.
The Italian gambling market is estimated to be worth €11.3bn a year, but only 9pc of the market there is online, compared to 25pc in the UK.
Mr Kennedy also said that the performance of the Irish retail market and Paddy Power's chain of shops here will be "a function of consumer confidence", as people brace for another tough Budget in coming months.
While the number of bets being made at Irish Paddy Power outlets has increased, the value of stakes bet has fallen. However, in the year-to-date the amounts staked at Irish outlets have risen 3pc.
Paddy Power chairman Nigel Northridge told shareholders that the company's revenue in the year to date is up 20pc, driven by a 29pc growth in online revenue and an 8pc rise in retail revenue.
"Sports results have been favourable overall, with the group's sportsbook gross win percentage above our normal expectations and above the equivalent period last year, notwithstanding a record number of Irish-trained winners at Cheltenham," said Mr Northridge.
In the UK, like-for-like net revenue at Paddy Power's retail outlets rose 2pc, driven by strong sportsbook growth, which offset a decline in machine gaming.