Paddy Power online profits drop 18% in H1
Strong growth from Australian sportsbook and mobile fails to make up for drop in sports margin with non-Australian online profit down 48%
Paddy Power recorded a double-digit decline in online operating profit for the first half of 2014 with a strong performance in Australia not enough to mitigate a 20% drop in European sportsbook revenue as non-Australian online operating profit almost halved in the period.
Group online profits dropped 18% for the first six months of the year to 43m, but operating profit for its online business excluding Australia was down 44% to 22m, a fall the Irish operator attributed to adverse sports betting results.
Paddy’s Australian sportsbook business saw strong growth with net revenue increasing 32% to 98.6m leading to a 57% increase in operating profit to 21.8m.
However, excluding Australia, sportsbook net revenue from its padypower.com and paddypower.it sites was down 20% year-on-year to 81.7m in H1 2014, despite what CEO Patrick Kennedy said had been a “cracking World Cup” for the operator with stakes 130% up on the previous tournament at almost 200m.
Net revenue from its egaming operations, including its online casino, bingo and poker offerings, were up 15% year on year to 66.2m leading to an operating profit of 22m, including an 8.9m loss from paddypower.it.
The operator’s underlying performance was good, however, with customer acquisition up 35% for the period at 795,000, an increase the operator said had been achieved without increasing marketing spend per new customer, while mobile accounted for 52% of total online revenues with 73% of sportsbook actives having used the channel in June.
“The punter friendly results in football and racing which impacted the gross win percentage in the initial six months of 2014 failed to put a halt to our gallop with strong underlying performance and accelerating top line momentum delivered in the period,” Kennedy said.
“The second half has started well with good stakes growth and a rebound in sports results. At this juncture, we expect mid-teen percentage growth in EPS for the full year, despite an 11m headwind from product fees, new taxes and currency translation,” he added.
Paddy Power’s share price was relative unchanged after early morning trading at 49.20.