Paddy Power eyes bumper World Cup as profit guidance dents shares

Wed Aug 28, 2013 11:18am EDT

* Shares ease on sports results, guidance

* Sees low to mid double digit FY operating profit growth

* H1 revenues rise 22 pct, online leads the way

By Padraic Halpin

DUBLIN, Aug 28 (Reuters) - Irish bookmaker Paddy Power held out the prospect of bumper takings from next year's soccer World Cup after full-year profit guidance for 2013 disappointed investors.

Shares in the group, hit by punter-friendly results in what is a quiet year for major sporting competitions, were down 0.3 percent at 59.9 euros by 1514 GMT, continuing a falling trend from highs above 70 euros earlier in the year.

Davy Stockbrokers cut its rating on Paddy Power to 'underperform' in late April when its shares traded at 67 euros, saying fair value was 57.80 euros. The stock has since fallen 11 percent.

Paddy Power, which has posted stellar top-line profit growth in recent years, said on Wednesday that operating profit rose 12 percent to 75.4 million euros ($100 million) in the first half with revenues up 22 percent, driven by the group's market-leading online division.

The Dublin-based group said it was on track for low- to mid-double-digit full year operating profit growth in constant currency terms.

Chief Executive Patrick Kennedy forecast turnover from the 2014 World Cup of over 100 million euros, compared with 86 million in 2010, and expected the competition to deliver a major boost to its new business in soccer-mad Italy.

In contrast to rival William Hill, which suffered a slow start to its expansion into Australia, turnover at Paddy Power's Sportsbet brand grew at its fastest rate to date with profit and customers also growing by over 30 percent.

The bookie, which is set to be hit by new betting taxes in Ireland at the end of 2013 and Britain a year later, is seeking to capitalise further on fast-growing online and smartphone markets which now account for over 75 percent of its profit.

This week it begins trialling the first real money sports betting product on Facebook with a view to rolling it out across the social network in a matter of weeks.

"For operators who get this right, it is an enormous opportunity," Kennedy said.

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