Paddy Power sees profits surge 56%

PADDY POWER has reported record results for 2010 — with operating profit up by 56% at €103.8 million — and the company said 2011 has started strongly.

The bookmaker said that profits increased across all of its divisions last year, including its Irish retail operation, where growth of 8% was recorded. Group pre-tax profits went from €67.2m to €111.3m.

As much as 64% of the company’s profits are now generated outside of Ireland — up from just 12% seven years ago — and profits were up by €15m at its Australian subsidiary, Sportsbet (in which it upped its stake to 100% before Christmas) and by over €6m in its British division. There, the company opened 31 shops last year and said it remains on course to have 150 operating by the end of this year. Nine new shops opened in Ireland and more are likely to be opened this year, bucking the trend of closures amongst much of its domestic competition.

Group chief executive, Patrick Kennedy, said that the good results “demonstrate the benefit of our ongoing business development initiatives and investment, which position the group well for further growth in 2011 and beyond.”

On that footing, management said that the company has seen a strong start to the current year — ahead of next week’s Cheltenham Festival — with turnover up by 16% and total gross win up 38% across January and February when measured on a year-on-year basis.

In terms of gross win — or the amount the company makes from losing bets — this number rose by 3% in Ireland (albeit against a backdrop of falling stake amounts) and by 36% in Britain, where the amounts staked by punters actually rose by 34%. Profit from Paddy Power’s online division, meanwhile, rose 20% to €57.5m; with over 30% of that business now coming from mobile phones.

Mr Kennedy added that the company will continue to seek expansion opportunities in new geographical markets, depending on future international deregulation and reiterated Paddy Power’s support for the planned online betting tax — aimed at boosting the exchequer’s coffers by around €20m per annum and which would hit the company’s annual profits by €5m — as long as it was enforceable on all internet betting service providers, and not just the Irish-domiciled companies.

However, he expressed doubts that this level playing field could be achieved and called for some sort of fixed charge, with the bigger players in the market paying the extra tax.