Shock win for Trump cost Paddy Power £5m
The election of Donald Trump as US president cost betting giant Paddy Power Betfair around £5m (€5.7m) in the final quarter of last year.
Online betting declined, the company said. Shares fell more than 3pc yesterday, after the results. The company said that customer friendly results had cost around £40m (€46.3m) in Q4 of 2016. The impact of these costs was mitigated by lower staff and marketing costs, the company said.
The businessman's shock victory in the US election was cited as one factor. In October, the company paid out over €1m on Hillary Clinton to be the next US president when Mr Trump's campaign was engulfed in a scandal after he was caught on tape bragging about sexually assaulting women.
Preliminary results show revenues rose to £1.55bn (€1.79bn) in the 12 months to December of last year.
Overall group revenues rose by 18pc last year compared to 2015, but the company said that favourable customer results had hindered profit margins.
Paddy Power said it expected the underlying EBITDA to be around the mid-point of the previously guided range between £390m and £405m. The company said that while it continued to see strong sportsbook growth, the favourable customer results had held back earnings.
There was a 25pc increase in the number of bets placed in Australia, with revenue growing by 18pc. The company's online offering contracted by 3pc over the course of the year, with the aforementioned sports results and weaker than expected participation in gaming cited as the main factors.
That was despite an overall increase of 10pc in the number of sports bets placed online.
"The company had a bad end to the period with adverse sporting results in November and December," said Gavin Kelleher, a gaming and leisure analyst at Goodbody stockbrokers. "For those two months it took a hit of around £40m on revenues, but over the long term the company has continued to show strong revenue growth and overall, the FY16 guided profit outcome is in line with market expectations."
Mr Kelleher said it was too soon to draw any strong conclusions from the gaming figures. "Obviously, any prolonged weakness in online gaming would be a cause for concern, but it is important not to place too much emphasis on the performance of one product in a single quarterly period.
"We will be looking to Q1 and Q2 of this year to see if gaming recovers.
"But historically, this a company with a very strong record of growing its gaming business," Mr Kelleher added.
Goodbody manages just over 1pc of Paddy Power stock on behalf of its clients.