Punters’ luck hits Paddy Power profits

PADDY Power profits took a fall last year following a run of luck by punters.

The country’s biggest bookmaker said a string winning favourites throughout the year sent pre-tax profits down 2% to €31.3 million.

Group turnover grew 18% to €1.37 billion following the opening of new shops and the launch of online casino games.

The company said the run of luck was with punters. It highlighting the nine Irish winners at the Cheltenham, an Irish winner of the Aintree Grand National, an odds-on win by Motivator in the Vodafone Derby and a number of other big races favourites romping home as the reason behind the fall.

Turnover at Paddy Power’s 195 betting offices in Ireland and Britain saw a 15% rise in turnover to €794.3m, but operating profits fell 46% to €9.5m.

The poor horseracing results saw the gross win margin (the percentage of turnover after paying out winning bets) in its betting offices fall from 12.9% in 2004 to 12.4%.

Chief executive Patrick Kennedy said gross win margins had been satisfactory since the beginning of the year, but the bookmaker’s was now guiding that the margins for 2006 would be between 11-13%, below the previous guidance of 12-14%.

But the fall in profits at the betting shops was offset to some extent by a rise in operating earnings from the company’s online activities.

Turnover here was up 40% to €327.5m with operating profits jumping from €8.8m to €17m following the launch of a poker website and other casino games.

The number of online users increased from 46,703 to 73,661.

Operating profits also slipped at the company’s telephone betting arm. Profits were down 22% to €3.6m on turnover 6% higher at nearly €250m.

Paddy Power’s said more betting shops in Britain are planned this year.

After opening 15 last year, a further 15 are scheduled to open in 2006 and it is planning its first foray into Europe.

The company plans to launch a betting site before this year’s soccer World Cup in a major European market, Germany.

The company also announced yesterday that 37-year-old Jack Massey will join as chief financial officer in April.

He succeeds Ross Ivers, who is leaving to takeover as chief executive of Irish Estates.

Even with the dip in profits, shareholders were rewarded. They saw a 10% increase in the dividend to 20.59 cents, to be paid out of earnings per share of 54.08c.