Paddy Power 2009: profit dips despite online growth
Paddy Power's pre-tax profit in 2009 was down 15% year-on-year despite growth in online and an increase in turnover of more than a third, the Irish bookmaker's financial year-end results reveal...
PADDY Power’s pre-tax profit in 2009 was down 15% year-on-year despite an increase in turnover of more than a third, the Irish bookmaker’s financial year-end results reveal.
Pre-tax profit for 2009 fell to 67.2, from 79m in 2008, due to contraction in the UK and Irish economies and a “punter-friendly” run of sporting results, the company said. Turnover rose 36% to 2,752, from 2,101m the previous year.
Chief executive Patrick Kennedy said: “Despite the economic problems, 2009 was a cracking year for Paddy Power punters on two fronts,” citing a slew of punter-friendly sporting results “which was the exact opposite to the experience of the prior year” and the bookies offers during 2009.
The latter included spending 10m more than in 2008 on campaigns such as “This One’s on Us”, paying for a customer’s bet after they’d placed it; and helped grow active sportsbook customers by 21% year on year, and total amounts staked by 32% from 2.1bn to 2.75bn. Online sportsbook bet volumes rose 55% year-on-year.
Online continued to grow its share of the Paddy Power business, recording record profit of 45.7m, 7% up on the figure of 42.8m for 2008, and accounting for 75% of the group’s full-year operating profit, compared to just 57% in 2008.
But adverse sports results resulted in an overall reduction in group gross win of approximately 29m over the year, substantially more than the 9m year-on-year reduction in operating profit to 67m.
Particularly costly was a run of nine Irish winners at Cheltenham, plus August’s run of results in the English Premier League, with just four draws in the first 66 matches, compared to a five-season average of 25%, which hit the results of other bookies including UK high street rivals Ladbrokes and William Hill.
“It appears draws are like Jordan’s weddings – you wait ages for one and then several come along at once – with 18 draws over the subsequent 51 games,” a company statement read.
Operational highlights for the bookmaker during 2009 included the geographic expansion of the business into Australia via the acquisition of Sportsbet and IAS, and in France through a B2B online agreement with PariMutuel Urbain (PMU), Europe’s largest betting organisation, to provide risk management and pricing expertise.
Paddy Power chairman Nigel Northridge added that trading in the current year to date had been satisfactory. “Adverse weather in January led to racing cancellations and impacted turnover but this was offset by favourable sports results. The board remains confident of the Group’s prospects.”