Paddy Power Betfair revenues race ahead thanks to weak sterling
Perfect timing for newly-minted bookie Paddy Power Betfair, which today unveiled a 25 per cent jump in group revenues and raised full-year expectations – in part thanks to the weak pound.
The figures
Group revenues increased 25 per cent to £404m, the group said today – including a £28m net benefit from the translation of non-UK revenues thanks to the weakness of sterling. On a constant currency basis, revenues were up 15 per cent.
Net revenue from its sports arm rose 15 per cent to £316m, while net revenue from gaming rose 14 per cent to £88m.
All of which pushed underlying operating profits up 68 per cent to £95m. Not bad.
Why it's interesting
It looks like Paddy Power's £7bn merger with Betfair, which was finalised earlier this year, couldn't have come at a better time, considering the falling price of sterling.
The company said it was ahead of schedule on synergy savings from the merger, and it now expects £35m of benefits this year, £5m more than forecast.
It added that Euro 2016 had been another bright spot, generating £16m of revenues across the group, bringing its total to £38m for the whole tournament.
That meant it raised its guidance on underlying earnings before interest, taxation, depreciation and amortisation to between £390m and £405m, up from the £365m to £385m it previously expected.
The one fly in the ointment is regulation: in recent years the gaming watchdog has tightened rules on internet gambling and gaming machines. Indeed, back in February the Gambling Commission accused it of failing to protect vulnerable people from being harmed or exploited – meaning now more than ever, it is on gambling companies to watch over their customers.
What Paddy Power Betfair said
Breon Corcoran, its chief executive, said:
This was another good quarter for Paddy Power Betfair. We are continuing to focus on building a stronger combined operation by exploiting the unique assets and capabilities of each legacy business, and on using our scale to better serve our customers.
Work is underway to combine the best of Betfair and Paddy Power's technology into a multi-brand, multi- channel, multi-jurisdictional platform that will start to unlock the full potential of the group's scale and will lead to increased pace of development and faster roll out of new products.
In short
Not a bad set of results for an industry which hasn't had the easiest times of late. Weak sterling is proving quite the earner.