Paddy Power’s profits down 15%

PADDY Power’s management has hailed 2009 as a year of development and evolution for the company, despite the bookmaker suffering a 15% fall in pre-tax profit and an 8% reversal in operating profit.

The company yesterday reported a pre-tax profit of €67.2 million for 2009, down from €79m for the previous 12 months, and an 8% fall in operating profit to €66.7m. Gross win from bets was, however, up by 8% to €296m and group turnover increased by 36% to just over €2.75 billion.

Chief executive Patrick Kennedy said that operating profit should significantly increase over the next few years. He pointed to the company’s expansion into Australia, its pending move into the French market, its biggest retail expansion in Britain in a single year and the ability to grow market share in each of its divisions as the successes of last year.

The company has 95 stores in Britain and remains on course to reach 150 by the end of next year. It has also recently bought another 10% stake in Australian online betting company Sportsbet, taking its overall shareholding to 61%. Further business-to-business deals, such as the deal with PMU in France, could also follow as more international betting markets open up.

Mr Kennedy also reiterated that while more shop closures are likely to occur in the Irish market this year, his company is unlikely to close any outlets.

Paddy Power boosted revenue from its Irish retail division by 4% last year, while the overall Irish betting-shop sector fell by 17%, in revenue terms. The online betting channel has increased across the board. Indeed, Paddy Power has seen a 101% increase in users of its online betting channel, to 446,000, in the last three years. Mr Kennedy also said the Government’s plans for changes in betting tax are expected to focus on taxing online betting. A 2% levy on companies’ online profits would hit Paddy Power’s annual operating profits by about €5m.

“We’ve never had an objection to paying tax on the internet betting of Irish customers, assuming that any tax is enforceable on all internet bookmakers providing services to the Irish market and not just on those of us who are based in Ireland providing valuable sustainable employment,” Mr Kennedy said on the matter.

Paddy Power’s share price rose by over 3%, or 71c, to €23.76 yesterday.