€10m soccer punch to hit Paddy Power first-half result

Paddy Power has said that its "two worst weekends ever for football profitability" earlier this year cost it — in gross terms — €10m, and will unfavourably impact on year-on-year group first half financial results.

The weekends of January 11-13 and March 22-23 both saw nine of the 10 favourites in Premier League fixtures win, resulting in Paddy Power and other bookies paying out on accumulator bets tracking the favourites.

However, despite this the company said yesterday via its latest trading update that it expects the impact of adverse sports results to be “largely offset by the impact of positive top-line momentum, the recycling of winnings by customers, favourable exchange rate movements, and the later-than-expected introduction of the Irish online and phone betting tax”.

“The group’s strong growth in 2013 has accelerated in 2014, with sportsbook stakes up 20% in online and 5%, like-for-like, in retail. Accelerated customer acquisition has been a key driver of online growth, with first time bettors up 16% in the period, compared to an 8% increase last year,” the company added.

When the company’s new shops are included, total net revenue is up by 15% on a year-on-year basis in the year to date.

At the company’s 2013 annual results presentation, earlier this year, Paddy Power management suggested its Italian operations should break even this year, despite seeing a 14% rise in losses last year. Italy is Europe’s largest betting market, and the world’s fourth biggest.

Speaking after yesterday’s AGM, chief executive, Patrick Kennedy reiterated that expectation and said that this summer’s World Cup in Brazil should be “a key opportunity for customer acquisition” in the Italian market, where football accounts for over three quarters of total sports betting.

Paddy Power management’s expectation is for a turnover of €160m from the tournament, which would be double what it generated from the 2010 World Cup in South Africa.