Wednesday 27 March 2019

Adverse weather impacts results at Paddy Power Betfair

Revenue growth at Paddy Power Betfair during the three months to 31 March 2018 was flat
Revenue growth at Paddy Power Betfair during the three months to 31 March 2018 was flat
Ellie Donnelly

Ellie Donnelly

Paddy Power Betfair has seen its underlying operating profit fall by 9pc year-on-year in constant currency to £80m (€91m) for the three months to 31 March.

Revenue growth during the period was flat.

The group said that customer activity in the Ireland and the UK had been impacted by a sustained period of "bookmaker friendly" sports results from November to February, as well as a high number of racing fixture cancellations.

Both Ireland and the UK was battered by bad weather earlier this year and lead to 14pc of horse races being cancelled in the UK and Ireland.

Earnings before interest, taxation, depreciation and amortisation (EBITDA) at the gambling giant fell by 6pc year-on-year at constant currently in the three month period to £102m, according to a trading update from the group.

The group said that the earnings were negatively impacted by both the annualisation of new betting taxes and levies, and start-up losses in its US businesses.

Excluding these items, underlying EBITDA was flat.

The company said that it expects its full year underlying EBITDA to be between £470m and £495m.

Commenting on the update, Peter Jackson, chief executive of Paddy Power Betfair said that the group had made "good progress" against its strategic priorities.

"In Europe, the successful completion of our platform integration has resulted in a meaningful improvement to the Paddy Power product," Mr Jackson said.

"This has seen the brand's gaming revenue returning to growth from February and a significant uplift in Cash Out usage and in-running betting during the Cheltenham Festival."

Meanwhile in Australia, where the group reported "good" underlying growth, Mr Jackson said that Sportsbet continues to perform well and is targeting further market share growth.

In addition he said that additional investment in the country was planned to take advantage of any disruption arising from market consolidation and the introduction of increased taxes.

In the US the group said that its TVG and Betfaircasino business have "good momentum" and that the group are continuing to make preparations for any positive regulatory changes.

As part of the trading update Paddy Power Betfair also announced plans to return £500m (€567m) of cash to shareholders through a share buy-back which it would initiate shortly.

Mr Jackson said that the share buy-back represented "a step towards a more efficient capital structure, whilst retaining substantial strategic flexibility."

According to analysts at Davy, the update re-emphasises what many shareholders already knew, namely that returning the group to double-digit growth is going to take time.

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