Paddy Power Betfair to take bigger punt on Australia
Gambling group Paddy Power Betfair will size up more bolt-on acquisitions in Australia and also plans to bring some of the lessons it has learned there to its operations in Europe, according to CEO Peter Jackson.
The company's outgoing chief financial officer Alex Gersh has confirmed that Brazil continues to be a market of interest for possible expansion.
Shares in the group sank more than 4pc at one stage yesterday, despite a strong set of financial results for 2017, as Paddy Power Betfair highlighted the lower market share of the Paddy Power brand in the UK, and said that it will lift its marketing spending.
It will also intensify the rollout of new products to bridge a gap that has widened between Paddy Power Betfair and its competitors.
The company's net revenue rose 13pc to £1.74bn (€1.94bn) last year, while earnings before interest, tax, depreciation and amortisation (ebitda) was 18pc higher at £473m (€528.4m). The company was helped by favourable sports results in events.
Mr Jackson highlighted the strong performance of the group's Sportsbet unit in Australia, which last year made posted underlying ebitda of £139m (€155.3m), up 42pc in local currency.
Mr Jackson said the more he learns about the group's Sportsbet business, "the more impressed I am".
"I also believe there are learnings we can apply to our European operations from our success in the Australian market," he added.
This week, Paddy Power Betfair lost out on a bid for the Australian business of William Hill.
A 15pc point of consumption wagering tax comes into force in Western Australia in January, and other states will follow suit.
"It's inevitable that some of the smaller players will wave the white flag, because they won't be able to cope with the fierce competition that's going on in the market and the introduction of the point of consumption tax," said Mr Jackson.
"You'd expect us to look at opportunities to bolt on our businesses in Australia. We'll be very disciplined."
Paddy Power Betfair will also move into a net debt position in the medium term, a move that could position it for acquisition activity, or for making special dividend payments to shareholders, for example.