Paddy Power Profit Up 48 pct After World Cup Windfall

Written by:
C Costigan
Published on:
Aug/25/2010

 

DUBLIN, Aug 25 (Reuters) - Irish bookmaker Paddy Power (PAP.I) said it expected full-year earnings to rise by up to 30 percent after an "exceptional" soccer World Cuphelped its first-half profits beat expectations.

Like other bookmakers such as Ladbrokes (LAD.L) and William Hill (WMH.L), Paddy Power reported a strong betting performance during June and July's World Cup, with gross wins over punters rising four-fold from the previous tournament in 2006. [ID:nLDE6711GL] [ID:nLDE66J06X]

Paddy Power, which recently entered the Australian and French markets and is increasing its UK high street presence, also attributed the performance to a raft of new customers, with UK online users up 52 percent.

"Our online investment has given us a lot of momentum, a lot of new customers and capabilities for the second half of the year and next year," Paddy Power Finance Director Jack Massey told Reuters in an interview.

The Dublin-based company said operating profit for the six months to June 30 rose 48 percent to 49.5 million euros ($62.65 million), ahead of the 47.75 million euros forecast by four analysts polled by Reuters.

Paddy Power's shares rose 4.69 percent to 27.2 euros by 1006 GMT, outperforming a 0.5 percent stronger local index .ISEQ.

With its fast-growing online and UK retail businesses continuing to improve, along with gross percentage wins since the end of June, it expected full-year diluted earnings per share (EPS) of 1.57 euros, growth of up to 30 percent, year-on-year.

Four analysts surveyed by Thomson Reuters I/B/E/S had predicted a 25 percent rise in full-year earnings per share to 1.52 euros.

LITTLE AUSTERITY AFFECT

Faced with customers hit by the financial crisis, particularly at home in Ireland, where it is the biggest bookie, Paddy Power said the average stake per bet decreased by 16 percent in the first half. However, the company said the growth in the overall number of customers compensated for the fall.

Massey said retail conditions remained tough in Britain, but added the government's austerity drive would not overly hurt business because it was opening shops in areas least hit by the downturn.

He acknowledged that mooted new taxes and fees in the UK and Ireland could affect earnings going forward, and criticised draft plans by the Irish government to tax telephone and online betting.

"There remains some risk of possible tax increases in Ireland and the UK, with the possibility of a new tax regime in Ireland in particular at a more advanced stage," David Jennings, analyst at Davy Stockbrokers wrote in a note.

"Such an increase would possibly reduce 2011 earnings by 4.5 m but we think that this will likely be offset in our forecasts by the continued strong momentum in the business." (Reporting by Padraic Halpin; Editing by Sharon Lindores) ($1=.7901 Euro)

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