Paddy Power: Earnings will rise despite 20% profit drop

Paddy Power is anticipating double-digit percentage growth for full-year earnings, despite seeing profits fall by 20% in the first half of the year.

The betting services giant also said, yesterday, that it is progressing well in its hunt for a new CEO and is considering its first share buyback programme in six years.

A previously reported €10m hit from two disastrous weekends of English Premiership football results (one in January and the other in March) and, more recently a €14m hit from the Epsom and Ascot race meetings dragged down first-half figures, which yesterday showed a pre-tax profit of €61.6m; 20% down on the same period last year.

Nevertheless, the company — which also saw a 4% year-on-year increase in net revenue to €396.5m — gained a record number of new customers (almost 800,000) largely boosted by the World Cup, while turnover from that tournament exceeded expectations at nearly €200m.

More favourable sporting results since the end of June have already resulted in second-half group net revenues being ahead by 45%, year-on-year and management remains confident of its prospects, targeting mid-teen percentage growth in earnings per share for 2014.

“The punter-friendly results in football and racing, which impacted the gross-win percentage in the initial six months of 2014, failed to put a halt to our gallop, with strong underlying performance and accelerating top-line momentum delivered in the period,” added chief executive, Patrick Kennedy.

Earlier this year, Mr Kennedy announced his intention to step down as CEO next April. When asked yesterday for an update on the matter, he said that the board had made good progress over the summer and is “well advanced” on making an appointment.

While mobile remains Paddy Power’s driving force, both its Irish and UK retail divisions saw strong revenue growth in the first half.