Disastrous Cheltenham hits shares at Paddy Power Betfair
Shares in recently-merged betting giant Paddy Power Betfair fell by almost 4pc yesterday as punters took home a £20m (€25.25m) net profit from a disastrous Cheltenham racing festival for the firm.
In the company's maiden quarterly update since its merger in February, sportsbook stakes at Paddy Power Betfair increased by 21pc to £2.29bn (€2.89bn) in the first three months of the year.
However, sportsbook net revenue fell by 0.2 percentage points to 7.5pc of total sportsbook stakes, which the company attributes largely to "adverse sports results".
It's also expected Leicester City winning the Premier League will have an impact on the second-quarter results.
Revenue at the Dublin-headquartered firm rose 16pc to £339m at the end of March, missing analyst expectations from both Goodbody and Davy, which predicted £341m and £352m respectively. Online revenue rose 17pc to £195m.
Group earnings before interest, tax, depreciation and amortisation (EBITDA) rose 27pc to £59m while the company's operating profit soared 36pc to £43m.
The company compared its results on a pro forma basis as if both Paddy Power and Betfair had always been merged.
Paddy Power Betfair chief executive Breon Corcoran said all four of the company's brands (Paddy Power, Betfair, Sportsbet, and TVG) continued to trade well in a "highly competitive" environment.
"This good start to the financial year is a credit to our colleagues, particularly at a time when we are bringing together two businesses."
The betting giant's chief said the integration of the two firms is "on track".
"We are working to bring the best of each business to the combined group and customers are starting to see some early benefits as we roll out product features across the brands."
Davy analyst David Jennings said at first glance the company's results may cause "some alarm".
"However, once the seasonal profit margin trends exhibited last year are considered, it becomes clearer that the group can still meet expectations for the year, albeit with profitability back-end-weighted once again," Mr Jennings said.
The company's net debt at the end of March stood at £54m.
Australian revenue jumped by 25pc to £58m with sportsbook stakes rising 31pc.
In March former Paddy Power chief executive Andy McCue announced he would be leaving the firm at the end of April while Paddy Power's chief marketing officer Gavin Thomson has also left the new entity.
During the period the company cut 700 jobs across the UK and Ireland as part of its cost cutting programme. Around 300 will be in Ireland.