Paddy Power shares tumble 9pc on bad run of sport results
Shares in gambling group Paddy Power – one of Ireland's biggest companies – plunged nearly 9pc at one stage yesterday as it issued a profit warning following a bad run of sporting results.
Champions League matches and Australia's Melbourne Cup were among the events that hit the group's gross win to the tune of €10m since July.
Chief executive Patrick Kennedy told investors that directors of the Paddy Power board hadn't seen such a poor run of luck for bookies since 1980.
Paddy Power now expects its full-year operating profit for 2013 to be about €11m lower than previously anticipated. That sent its shares into a nosedive.
Mr Kennedy said that the Melbourne Cup, which virtually shuts down business in Australia while it's on, was won this year for the first time since 2005 by a favourite – Fiorente. Bred in Ireland and initially trained in Britain, the horse had come in second last year.
The CEO said that sporting results since the company issued its interim results earlier this year, and particularly in the last three weeks, have remained poor for the group. The Melbourne Cup was run on November 5.
Mr Kennedy also noted that online competition in the UK had continued to strengthen in advance of a new tax regime that was expected to be introduced there at the end of 2014.
But Paddy Power's online business performed well despite the tougher environment, it said, posting double-digit growth in both sports turnover and e-gaming net revenue, without increased marketing spend as a percentage of net revenue between July and the middle of November. The group said that its retail business in Ireland and the UK had also performed well since July.
The company has opened 46 shops so far this year, nine of them in Ireland and the remainder in the UK. By the end of the year it will have opened 65 new shops, it said.
Paddy Power said that stakes made at its Irish retail outlets maintained a positive trend that had been witnessed in the first half of the year. Like-for-like growth of 5pc in the period exceeded that achieved in any six-month period since 2007, it added.
"Following five very tough years, the Irish economy is improving," said Mr Kennedy, adding that there had now been four consecutive quarters of employment growth and that 2014 should show further economic strength.
While Paddy Power is one of a number of firms that has been awarded a preliminary licence to operate services in New Jersey as the state legalises internet gambling, Mr Kennedy said the company would not be active there once the market opened up at the end of this year.