Paddy Power warning over profit

Paddy Power has reported record annual pre-tax profits of €139.2m for 2012, but has warned that exchange rate patterns could hit its operating profits by around €10m this year.

Overall, 2012 was one of continued strong performance growth for the Dublin-headquartered gaming giant.

The pre-tax profit figure represented growth of 15%; operating profit was up by 8% to over €102m; group net revenue of just under €654m was up by 25% in constant currency terms; earnings per share rose by 17% to 248.1c; the dividend per share increased by 20% to 120c on the back of a 16% recommended increase in the final dividend to 81c; and the company’s net cash reserves went from €153m to €209m.

There was a 25% increase in the amounts of money staked by customers, and new customer numbers rose by over 50%.

While revenue across all divisions was up, overall growth was largely driven by the online channel, with revenues up 27% to €263m.

However, the launch of four online gaming products resulted in start-up losses of €20.5m. Most of that covered the launch of the company’s online division in Italy, which saw start-up losses of €15m. However, the Italian launch has seen the company build up a 5% share of sports betting market there since its inception in May, and the unit is expected to break even before the end of 2014.

“Online goes from strength to strength,” said Paddy Power chief executive, Patrick Kennedy. “The adoption of mobile across our markets — combined with our e-commerce capabilities, technology, and brand, — means we now have nearly twice as many active online customers than we had in 2010.”

With revenue up 7% at the company’s Irish retail division to €110m, and by 31% to €101m at its UK retail unit, management said “plenty of opportunities” remain to open shops across Ireland and Britain this year. More than 40 new stores opened in Britain last year, representing a record year of new openings for the company in that market.

Noting recent moves to allow for online casino play in New Jersey, Mr Kennedy stated that the company — which has already registered an interest in the US market — will continue to watch developments on that side of the Atlantic “closely”.

Management scotched any notion that Paddy Power may become the next in a growing list of Irish companies to partially or fully delist from Iseq. Chief financial officer Cormac McCarthy said that it is not an issue for the company, at present, adding “we have a very good, high quality, shareholder register”.

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