'Run of luck' during World Cup helps lift Paddy Power profits by 48pc to €49.4m
A RUN of luck during the World Cup and the inclusion of income from its new Australian subsidiary helped to lift Paddy Power's operating profit 48pc to €49.4m during the first six months of the year, the company revealed yesterday.
In what was a bumper World Cup for the betting chain, Paddy Power chief executive Patrick Kennedy said that the company's customers staked a total of €86m on the championship, with €60m of that laid within the group's first-half reporting period. That compared with €48m that was staked by Paddy Power customers on the 2006 World Cup.
The total gross win for Paddy Power from this year's tournament was €18m, with €11.7m attributable to the first-half of the year.
The total staked by customers during the first six months of the year, including the figure from Australian Sportsbet operations that Paddy Power bought into last year, climbed 63pc in constant currency terms to just under €1.9bn, while the total income for Paddy Power was €205.6m, up 53pc in constant currency terms.
Mr Kennedy added that the company's retail business remained an integral part of group strategy, even as the firm's online profits continued to eclipse those from its high street stores in Ireland and the UK. About 75pc, or just under €37m, of the company's operating profit was generated by online activities in Ireland, the UK and Australia during the first half.
The group has 600,000 active online customers -- nearly double the amount this time last year. The Australian online business generated an operating profit of €7.9m off total stakes of €593.1m.
Mr Kennedy said the overall retail betting business in Ireland was five times larger than its online-based segment and that the retail opportunity for the company in the UK was "enormous".
"We are now seeing material profits start to emerge from our UK retail business," he added.
The company had 107 outlets in the UK at the end of June and expects to have 150 by next year. There are currently roughly 9,000 betting shops in the UK. Paddy Power's UK retail business generated an operating profit of €3m in the first half, up from €500,000 in the corresponding period last year.
In Ireland, Mr Kennedy conceded that the economic environment remained difficult and had adversely affected spending by customers. He said the size of the average stake laid at outlets here had fallen 10pc and operating profit at the shops on the first half tumbled 23pc to €9m.
The amount staked by customers was unchanged at €476m, but that was on the back of the opening of five additional stores in the intervening period.
The company expects to exceed current market earnings forecasts for the full-year, and to achieve underlying earnings per share growth of 30pc for 2010.
Paddy Power shares closed up 84c, or, 3.2pc at €28.64 yesterday in Dublin.