Paddy Power up despite profit fall

BOOKIES chain Paddy Power was the biggest upward mover on the Irish stock market yesterday, despite showing a drop of €13 million in first-half pre-tax profits to €34m.

Shares in the ambitious company – set to be the only betting firm not to close shops in its Irish-based retail portfolio this year – rose by 6.72%, or €1.28, to €20.33, on a day when the combined value of the ISEQ fell more than 1%.

Chief executive, Patrick Kennedy, called the first-half period “a great start to the year for punters and a positive start for Paddy Power.”

As well as the year-on-year fall in pre-tax profits, first-half operating profit fell from €45.1m to €33.5m.

Earnings per share for the six months to the end of June amounted to 63.4c compared to 87.4c for the same period last year.

“A swing in the year-on-year run of sporting results – a normal occupational hazard for bookmakers – has driven a reduction in our operating profit in the period, but we’re happy with the strong underlying performance,” he added.

That underlying performance included an increase in market share across all divisions and a 12% climb in turnover year-on-year.

Its Irish retail division saw a 43% year-on-year drop in operating profit to €11.7m, although the number of shops increased from 186 to 195. William Hill and Ladbrokes have already stated they have or will be closing shops here this year.

Operating profit within its British retail division remained at €500,000, but there was marginal growth in its online division, which is becoming the main profit and revenue driver, with operating profit going from €21.1m to €21.8m.

Earlier this year, the firm expanded into the Australian market by buying a 51% stake in the leading online betting firm, Sportsbet. Yesterday, Mr Kennedy said: “It’s early days in Australia, but Sportsbet is an excellent fit with Paddy Power and has buckets of potential to build on its market position as we complement its existing skills and experience.”

The company could eventually enter the potentially lucrative online US betting market with legalisation currently being pushed by congressman, Barney Frank.

He said earlier this summer that he was confident of getting a bill passed in 2010 and Paddy Power has said if the US market was legalised, it would be very interested in generating a presence.