Mobile betting the right call for Paddy Power as €67m profit revealed
Betting group Paddy Power is luring more users to its mobile platforms and is poised to launch its latest foray into the online UK casino market as it posted record first-half results.
The company unveiled a 13pc rise to €67.1m in operating profit for the first six months of 2012, with net revenue climbing 29pc to €311m.
But shares in the group fell yesterday as the operating profit fell behind analyst expectations, even excluding losses associated with new ventures. The company also significantly increased its marketing spend in the first half, by 74pc to €35.2m.
Its online operations, including its operation in Australia, generated €49.1m of the group's operating profit in the first half, or just over 73pc of the total.
The amounts staked online, excluding its Australian arm, rose 31pc to €1.05bn, but operating profit at the unit declined 6pc to €35.9m as the group spent €6m on start-up costs primarily related to its launch in Italy. It began offering services there in May and by June had captured 4pc of the market, according to chief executive Patrick Kennedy.
The firm is increasingly investing in the development of mobile games. Mobile games and casino activities generated 20pc and 19pc of total revenues respectively by the end of June.
In Australia, Paddy Power said its online business generated a €13.2m operating profit in the first half, 24pc higher than in the first six months of 2011 as net revenue rose 32pc to €67.2m.
The Paddy Power retail division in Ireland has continued to experience tough conditions. While betting volumes have risen, the amounts staked continued to narrow, falling 2pc to €474m in the period.
But operating profit at its Irish stores jumped 79pc to €9m, helped by what Paddy Power said was the "normalisation" of sports results.
Mr Kennedy said he wasn't particularly concerned that further tough Budgets would crimp demand for Paddy Power in Ireland for its betting services.
"We have seen tough Budgets since 2008 and 2009. Top line in Irish [betting] retail overall has declined by something close to 30pc," he said, adding that more than 300 betting shops had closed over the past few years.
Mr Kennedy said that €78m was bet by punters with the group during the summer's Euro football championship.
That was 168pc higher than during the tournament two years ago. He said the impact on the bottom line wasn't significant, however, and that the championship was viewed more as an opportunity to gain new customers.
He said that €30m was bet with the group on Olympic events this year -- that's compared to the €2.5m that was bet during the Beijing Olympics four years ago.