Paddy Power Betfair posts losses of €55.4m due to merger costs
Gambling giant’s revenues grew 18% in six months to the end of June
Paddy Power Betfair: a £195.1 million charge for February’s merger left it with a £47.5 million loss. Photograph: Matthew Lloyd/Bloomberg
Merger costs left Paddy Power Betfair with a £47.5 million (€55.4 million) loss at the end of June.
The group also announced that Paddy Power co-founder Stewart Kenny, who as chief executive led the Irish bookie’s flotation in 2001, is stepping down from the board.
The gambling giant created last February when Paddy Power and Betfair joined forces said that revenues grew 18 per cent to £759 million in the six months ended June 30th from £642 million million during the same period last year.
Operating profits grew 39 per cent to £147.6 million from £106.5 million over the same period. However, a £195.1 million charge for February’s merger left it with a £47.5 million loss.
Its shares shed more than 2 per cent yesterday to close at 9,735 pence in London, where the Irish group has its main listing, while they fell at a similar rate in Dublin to €114 from €116.40.
Chief executive Breon Corcoran said that the merger will cut the enlarged group’s costs by £65 million, £15 million more than originally expected, with the full benefit of this kicking in next year.
The group expects earnings for the full year will be £365-£385 million, 22-25 per cent more than the £296 million total that the two businesses generated in 2015.
In the first half, its online division, including Paddy Power and Betfair in Ireland, Britain and Europe, earned £140 million in operating profits, 40 per cent more than during the same period last year.
In its Australian subsidiary, Sportsbet, a sharp rise in costs combined with sports results that favoured punters to leave profits trailing by 12 per cent at £26.1 million.
Profits at its US division, which includes horseracing and betting network TVG and Betfair Casino, increased by more than 153 per cent to £2.9 million. Its 603 Paddy Power betting shops in Britain and Ireland grew profits by 21 per cent to £23 million.
Paddy Power Betfair is unlikely to bid for the 400 or so shops that rivals Ladbrokes and Coral must sell as a condition of being allowed to merge. However, its chief executive pointed out the group would continue to buy “the right shops at the right price”.
Meanwhile, Mr Corcoran argued any move to double the Republic’s betting tax to 2 per cent would close more bookmakers’ shops.
He was reacting to comments from Brian Kavanagh, chief executive of Horse Racing Ireland, that the racing and bloodstock industries believe a doubling of the charge, recently extended to digital betting, is still on the table.
“Operating margins in betting shops are very, very skinny,” Mr Corcoran said. “Doubling the tax would almost certainly lead to closures.” He added that one-in-five outlets had closed since the beginning of the recession.