Saturday 1 October 2016

Paddy Power revenues top €1bn and dual Betfair brand strategy on course

Published 09/03/2016 | 02:30

Breon Corcoran
Breon Corcoran

There's still room for both the Paddy Power and Betfair brands following the €10bn merger between the groups, the chief executive of the new entity, Breon Corcoran, has insisted.

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The two gambling groups have previously indicated that they intended to retain both names and Mr Corcoran, inset, said that remains the case.

"We're five weeks into the deal," he said. "While we've been thinking about this for several months… that conversation about competitively sensitive issues only happened at the back end of January. We'll address this more fully in August."

Mr Corcoran said there is work under way on the two brands (the company is now known as Paddy Power Betfair).

He said that current betting being offered by the two brands for the Cheltenham racing festival next week is a helpful indicator of how the two brands are targeting punters.

"The Betfair brand offer is rewarding people who back winners at 3-to-1 or greater; with the Paddy Power offer, people get rewarded if the horse is second, or if it's a faller," he said. "So, I think there's already evidence that we can target different segments of the market using the brands."

He said that it was "crucial" that any integration work didn't disrupt business momentum during the Cheltenham and Aintree festivals, as well the Euro 2016 championship.

He revealed that Betfair also hopes to open a horseracing betting exchange in New Jersey this summer, now that online gambling is legal in the US state.

Mr Corcoran was speaking as the enlarged group released full-year financial figures for Paddy Power and third-quarter results for Betfair.

Betfair's earnings before interest, tax, depreciation and amortisation in the period was up 10pc at £26m (€33.5m). Full-year revenue at Paddy Power soared 24pc to €1.09bn - a record for the group and the first time it ever surpassed the €1bn mark.

It notched up double-digit growth across all online and retail divisions. Operating profit rose 10pc to €180m, and was 50pc higher when new taxes and product fees were excluded.

At its online operations, excluding Australia, operating profit dipped 3pc to €72.9m. Profits at the Australian online business - where its Sportsbet unit is now the biggest online operator there - were 52pc higher at €79.5m.

Online net revenue, excluding Australia, rose 12pc on a constant currency basis to €398.8m, and in Australia was 43pc higher on a constant currency basis, at €320.8m.

In Ireland, Paddy Power's retail division generated an operating profit of €20.3m, up 30pc on 2014, as net revenue climbed 14pc to €144.8m.

In the UK, operating profit at the retail arm was up 10pc at €23.4m, but down 8pc on a constant currency basis. Net revenue at the UK retail business was 28pc higher at €222m. It was up 15pc on a constant currency basis.

The group opened 21 shops in the UK last year and a net 34 altogether between Ireland and the UK.

Andy McCue, the former chief executive of Paddy Power who's now the chief operating officer of Paddy Power Betfair, said that it's likely to open fewer than that this year as it becomes more difficult to identify attractive sites that can generate the sorts of returns required.

In Ireland, it opened 14 shops last year and will open a "handful" this year, said Mr McCue.

He added that any outlets that might have to be disposed of by any rivals would have to meet the group's criteria. A planned merger between Ladbrokes and Gala Coral could result in shop disposals to meet any regulatory concerns that might arise.

Irish Independent

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