Paddy Power, Ireland's biggest bookmaker, today reported a 10% increase in first-half 2008 pre-tax profits to €47.1m. However, it has lowered its outlook for the full year because of weaker economic conditions in the UK and Ireland coupled with higher payouts to punters.
Paddy Power reported growth in earnings per share of 17% to 82.3 cent and in operating profit and profit before tax of 10% to €45.1m and €47.1m respectively (all before inclusion of an exceptional gain of €2.7m in 2008). It said it had a favourable run of sporting results in the first six months, offset a €2.5m from the stronger euro against sterling.
However, the firm has had a run of unfavourable results since June, while growth rates had slowed in line with economic conditions.
Commenting on the results Patrick Kennedy, Chief Executive, Paddy Power plc said: "We have grown earnings per share by 17% in the first six months of 2008. Our online operations performed particularly well with a 43% increase in profits taking their contribution to almost half of Group profits.
Much has happened since our last trading update three and a half months ago. The performance of the Irish and UK economies has deteriorated, and the growth rates in our businesses have slowed accordingly. Paddy Power has always focussed on providing better value than the competition, and as our customers face tighter times we have stepped this up in the last three months. In addition, we said last year that the old adage of 'what goes around comes around' applies to sporting results and they certainly have come back around for punters since June with a string of unfavourable results for bookmakers, and Irish bookmakers particularly. These factors have led us to moderate our operating profit outlook for the full year from approximately €82m to €75m, representing growth of €3m over the 2007 level of €72m.
Against this more challenging backdrop, the outlook for Paddy Power remains strong. Broadly half our profits come from the fast growing online betting and gaming market, we will continue to lead and differentiate ourselves in the Irish Retail market, whilst our expectations for the potential size of our UK Retail estate has increased to at least 150 shops by 2011."
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