Paddy Power profits hit by "exceptional" sports results

Tue Mar 4, 2014 5:56am EST

By Padraic Halpin

DUBLIN, March 4 (Reuters) - Paddy Power's profit growth slowed as expected in 2013 after a run of unfavourable sports results amid intense competition in UK online betting that the bookmaker believes will lead to further consolidation.

Paddy Power, used to posting stellar top-line profit growth, had flagged in November that an "exceptional" run of punter-friendly results would see full year operating profit come in about 11 million euros ($15 million) lower than expected.

The Dublin-based group said on Tuesday that operating profit was in line with consensus at 137.4 million euros, 1 percent higher than a year ago or 4 percent in constant currency terms. Revenue grew by 17 percent to 745 million euros.

"It was a pretty horrific run of sports results, but if it's good for the punters, ultimately it will be good for us. You never can tell, but over time, it evens out," Paddy Power chief financial officer Cormac McCarthy told Reuters.

The amount of money staked by customers was up 16 percent in January and February, Paddy Power said ahead of a busy period that includes the soccer World Cup in June when activity traditionally rises significantly.

Its shares were 1 percent lower at 59.8 euros at 1030 GMT.

The bookmaker, which also has a presence in Italy, France, Australia and Canada, said it had signed a new contract with the largest operator in Slovakia, a move that McCarthy said would not be significant to earnings but showed Paddy Power's strength in the business-to-business market.

With British bookmakers advertising aggressively to chase market share ahead of the introduction of a new 15 percent tax on online winnings in December, Paddy Power, which opened 57 UK shops last year, said market share was already consolidating amongst the larger operators.

"We have scale, we are very efficient and we have got a very significant customer base. We think as this plays out those with scale and something unique like we have will trade through this very successfully," said McCarthy.

"Others who can't match that will struggle."