Paddy Power lowers profit forecast

Bookmaker Paddy Power expects full year operating profit to be about €11 million lower than it forecast three months ago after unfavourable soccer and horse racing results.

The Dublin-based group, which has posted stellar top-line profit growth in recent years, said results had gone against it since July, particularly at the Australian Spring Horse Racing Carnival and Champions League soccer.

“We now expect low to mid single digit percentage operating profit growth in 2013 in constant currency, before currency translation headwinds of 3 per cent,” Paddy Power said in a trading update covering the period July 1 to November 17.

“This is approximately €11 million lower than the mid-point of our guidance at the time of our interim results.”

Last week British rival Ladbrokes responded to speculation it could be forced to cut estimates for the second time in three months on adverse sports results, insisting it was on track to hit analysts' forecasts.

Paddy Power reported an operating profit increase of 12 per cent to €75.4 million in the first half of the year with the group’s market-leading online division driving revenues up 22 per cent.

It said that online sports turnover, excluding its growing Australian business, rose 15 per cent compared to the same period to mid-November last year, with Australian online up 26 per cent and retail up 5 per cent.

Paddy Power has been quicker than competitors at reacting to customers moving online and makes more than 75 per cent of its profit through Internet betting. It said competition in the UK online market continues to strengthen.

The betting group, which has expanded into France and Canada through partnerships, launched its brand last year in Italy and said it has maintained an estimated 8 to 9 per cent share of the online sports betting market there.

Reuters