BOOKMAKER PADDY POWER’S half-year results show that profits at the company fell by 14% to €60.1 million thanks to several good days for punters.
Strong performances by heavily backed teams in the Premiership and short odds winners at the Epsom Derby and Royal Ascot helped contribute to what the bookie this morning called “adverse sports results with a gross impact of €34 million”.
The Dublin-based company did manage to increase revenue 7% during the period, with a “very strong” World Cup to thank for 148,000 new customers and bets of €198 million, some 130% higher than the 2010 tournament.
Ahead in the long run
Warren Ruhomon, an analyst with finspreads.com, said that despite the tough run of luck the bookmaker has had to endure, in the five years since 2009 annual profits have doubled.
“On a longer-term perspective, today’s 20% drop in first half operating profit, while negative, should perhaps by taken more moderately.”
Ruhomon said that he is taking a “wait and see” approach to Paddy Power before bad mouthing it.
“I want to see the effect of the bad spell in betting wash out completely (likely in the second half) before I take a view on the strength of the current management.”
There is much underlying strength in this business and that ought to come to the fore by the end of the year. If it doesn’t, the company will face questions from investors.
He said that the company will have a few tailwinds behind it for the rest of the year, including moderate risk of increased taxation from revenue authorities in the UK, as well as a lower likelihood of the company facing tighter regulation in key markets.
Ladbrokes battle
Meanwhile, Paddy Power is in a straight run-off with Ladbrokes for primacy in the rapidly expanding mobile betting market. The UK outfit has 38% of that market, with Paddy on 32%.
“We know that many users of these apps seem to have more than one, so strategies to increase ‘stickiness’ are obviously where the operators will be looking, as well as increasing the amount of activity each user engages in, because active users are the drivers of the mobile market – not downloads.”
Merrion analyst David Holohan said that the results were “strong, and reflect continued growth in both the online and retail businesses. The group’s strategy continues to work and is evidenced by the increase in World Cup activity that Paddy Power achieved over the 2010 tournament”.
The chief executive of the bookmaker announced in May that he will be leaving the company next year.
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