Cheltenham success boosts Paddy Power profits

A losing Cheltenham race week for punters helped boost profits at bookmaker Paddy Power Betfair to almost €200 million in the first six months of this year.

The Irish betting group said that revenues rose 9 per cent in the first half of this year to £827 million (€913 million) from £759 million during the same period in 2016.

Excluding costs tied to the merger that created the business, operating profits rose 22 per cent to £180 million (€199 million) from £148 million.

Paddy Power Betfair said that favourable results from this year’s Cheltenham National Hunt Festival drove a strong performance in the first quarter.

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However, the group noted that the lack of a major football tournament and sports results that favoured punters hit the second quarter. The Euro 2016 Championships began in June 2016, which was reflected in the previous year’s figures.

Earnings per share rose 23 per cent to 181.1 pence from 147p while the group is proposing to pay a dividend of 65p, 25 per cent more than the 52p paid last year.

The results come in the wake of news that its chief executive, Breon Corcoran, is leaving and will be replaced by Peter Jackson, current head of Worldpay UK.

The interim figures failed to calm investors’ nervous reaction to the announcement. Paddy Power Betfair shares ended the day down 3.9 per cent down €80.20 in Dublin and 4.11 per cent to 7,240 pence sterling in London.

The merger of Paddy Power and Betfair in February 2016 created the group. The results treat the business as if the two companies had been merged from the beginning of last year.

Write offs of €75 million tied to the merger left the group with a final operating profit for the six month period of €104 million, against a €48 million loss during the first half of 2016.

The results show that it lost more than 200,000 customers from its on-line division during the period. This business includes the Paddy Power and Betfair internet operations in Ireland, Britain and Europe, as well as its gaming operations.

Mr Corcoran said that this was partly due to a loss of casino gaming - rather than sports betting - customers to rivals and to a change in how it defines active customers. "I am very confident that we will get it back to growth by the end of the year," he said.

He also stressed that changes in the rules governing betting machines in its 350 UK bookie shops, which some say could cost £55 million a-year in revenues, will not force it to close outlets. “We have already told our staff that,” Mr Corcoran said.

The group expects full-year earnings, including a £15 million loss from Draft, to be between £445 million and £465 million.