Paddy Power shares decrease 6% as Cheltenham approaches

Shares in bookmaker Paddy Power Betfair fell almost 6% yesterday as brokers focused on the prospects of growth in online gaming across the industry.

Paddy Power shares decrease 6% as Cheltenham approaches

The newly merged company reported an 18% increase in revenues for 2016.

Underlying earnings before interest, tax, depreciation, and amortisation climbed 35% to £400m (€462.9m), and it paid a final dividend of 113p a share.

Paddy Power and Betfair came together in a €8bn merger last year.

The enlarged company confirmed that the integration of the businesses had gone to plan.

Chief executive Breon Corcoran said the company had work to do in online gaming “to get it back to what it was” before the slump.

He said: “It was softer for a bunch of reasons, some internal and some external. It has improved a little bit at the start of the year. I think we have a bit more work to do. In truth, we have been very focused in optimising the sports betting offer last year and we made good progress there.

"We have a bit more work to do on gaming. We’ve increased our spend on online gaming, we’ve committed to do some work on products so I’m happy we can get it back to what it was, but it will take a bit of time.”

Mr Corcoran said there would be no further job losses under the tie-up.

Instead, it plans new outlets in Ireland and the UK this year, he said.

He said that Paddy Power Betfair would hire consistently in 2017 and that the staff numbers were now back to the levels of a few years ago.

Mr Corcoran said the company has “considerable firepower” to make acquisitions, but he poured cold water on the idea of buying in the near future.

He said there was an appetite to expand the business but that the “right deal had to come at the right time” and that there was no such move on right now.

He reaffirmed Paddy Power Betfair’s commitment to retain its head offices in Dublin.

Davy Stockbrokers said that the results showed its Australian operations performed strongly and that the company could tap more gains there this year.

“On the flipside, the weakness in online gaming, first experienced in quarter four, persists,” the broker said.

“Lower levels of gaming cross-sell and reduced VIP activity led to gaming revenues being down 1%[in the fourth quarter].”

Merrion Capital described the results as stellar, with strong growth in the US and Australia. It said: “Management have done an excellent job in integrating two of the leading gambling brands over the past year creating a distinct difference.”

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