Online sales help profits at Paddy Power soar
PROFITS have jumped by more than a fifth at Paddy Power after strong online and mobile sales.
The company saw growth in almost every division in the first six months of 2013 – bar its Irish retail operation.
Its board has now bumped up its interim dividend by 15pc to 45c a share.
Half year profits from online activities were up 29pc to €243m while profits from mobile sales doubled to €104m. Its Australian online division did particularly well, with profits up a third.
The increasing importance of mobile devices to the betting industry is clear from the results – 64pc of its active sportsbook market transacted via mobile in June.
On the retail side Paddy Power said it had increased its market share, with 19 new UK shops opening during the period and seven new Irish shops. UK operating profit from retail was up marginally to €7.8m, despite a €0.9m new gaming machine tax regime. However operating profits from its Irish retail activities decreased by €1.5m to €7.6m, which it blamed on unfavourable sports results, particularly Cheltenham.
“Paddy Power had a very good first half” said chief executive Patrick Kennedy. “Revenues increased in every division with very strong growth of 29pc in online, which delivered over three quarters of group profit. The excellent performance of our Australian business was a particular highlight. Almost two thirds of the Group’s online sportsbook customers now transact with us via mobile and this continues to grow.”
The company also highlighted its social networking presence. It said it now has more than 1.7m Facebook fans and Twitter followers, more than double that of nearest industry competitor. It is due to start capitalizing on this with the launch of a Facebook spin-off in August, Paddy Power In-Play.
Mr Kennedy gave a positive outlook for the remainder of 2013, predicting low to mid double digit full year operating profit growth despite very poor sports results.
“The second half of the year has started very well from a turnover point of view with sportsbook stakes up 25pc in online and 4pc in retail on a like-for like basis. Despite very poor recent sports results, we are on track to achieve low to mid double digit operating profit growth in constant currency in 2013. Currency translation headwinds if maintained at current levels for the full year would lower this constant currency year-on-year profit growth by 4pc. The board is confident of the Group’s prospects for the balance of the year and beyond.”
Shares at the company were down 2.3pc this morning to €60.07.
They have risen by nearly a fifth in the past year, but are still down on the high of €71.40 that they traded at in late March.
Earlier this week Davy stockbrokers said the stock was overvalued given the "competitive and tax-related headwinds" facing the group over the medium-term.