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Paddy Power group 'to spend €6m' on its launch in Italy

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At the announcement of Paddy Power's 2011 results in Dublin yesterday were chief executive Patrick Kennedy and
finance director Jack Massey (right), teaming up with Tina Sparkle, who set the screen alight in the company's recent 'Ladies Day' TV advertising campaign

At the announcement of Paddy Power's 2011 results in Dublin yesterday were chief executive Patrick Kennedy and finance director Jack Massey (right), teaming up with Tina Sparkle, who set the screen alight in the company's recent 'Ladies Day' TV advertising campaign

At the announcement of Paddy Power's 2011 results in Dublin yesterday were chief executive Patrick Kennedy and finance director Jack Massey (right), teaming up with Tina Sparkle, who set the screen alight in the company's recent 'Ladies Day' TV advertising campaign

Paddy Power's launch in Italy -- its first entry into a non English-speaking country -- will have a net cost to the group of more than €6m this year but gain rapid traction, the betting group believes.

Paddy Power hopes to roll out an online service in the country before the Euro 2012 football championship that begins in June.

It made the announcement as it released strong results for 2011, with pre-tax profit, excluding an exceptional gain, rising 16pc to €121.2m. Group net revenue advanced 17pc to just under €500m. So far, 2012 has also got off to a solid start for Paddy Power, with like-for-like revenues up 16pc.

Chief executive Patrick Kennedy said that 79pc of Paddy Power's profits were being derived from internet and mobile betting. Total net revenue at the online division, excluding operations in Australia, climbed 31pc to nearly €200m in 2011, with operating profit at the unit 32pc higher last year at €74.3m.

Mr Kennedy said the surge in online activity had been driven by attracting a significant number of new customers, and reducing churn. He said that the number of active customers in the UK grew 50pc last year to more than 710,000, while in Ireland it was 17pc higher at almost 197,000.

"Mobile continued to be a key driver of performance," he said. "Last month, 49pc of our online betters transacted with us via mobile."

In Australia, net revenue rose 9pc on a constant currency basis to €107.4m, while operating profit gained 8pc to €22.8m on the same basis.

Irish division

Mr Kennedy insisted the group's Irish retail division continued to have an important role to play within the group, despite operating profits in the unit having tumbled 38pc last year to €10.9m.

Net revenue at the division fell 6pc to €102.8m. The amounts staked rose, however, by 3pc to €935m.

The decline in profits was partly due to a string of adverse results for the group, particularly at Cheltenham this time last year. "People still enjoy going into a betting shop," said Mr Kennedy of the Irish arm. "Bet volumes are very healthy. It's the stake per bet that's under pressure."

In the UK, Paddy Power's retail business performed much more strongly, with operating profit having jumped 49pc in constant currency terms to €10.5m, while net revenue grew 36pc to €72.2m.

The group said that all its outlets in the UK considerably grew profitability despite adverse results.

The business had 165 outlets in the UK at the end of 2011. The head of Paddy Power's UK retail business, Andy McCue, said there continued to be scope for the group to open between 35-40 shops a year there for at least the next three years or so.

Analysts upgraded their forecasts for 2012 based on Paddy Power's performance last year.

Its shares closed in Dublin up 58 cent, or 1.29pc, at €45.53.

Irish Independent