Sports results hurt Paddy Power

The number of new customers playing online increased 35 per cent to 795,000 in the first half, but that wasn’t quite enough to fuel growth. Online revenue was flat during the period at €242m, and operating profits plunged by nearly a half - though the figures look slightly better if you strip out adverse currency effects.

The growth in customer numbers can be attributed to heavy spending on TV advertising and marketing, specifically targeting football audiences. Like many of its sector peers, Paddy is hoping to boost the scale and momentum of its business ahead of the introduction of a Point of Consumption (PoC) tax in December. The investments are starting to pay off: paddypower.com (the website for British and Irish customers) saw its football unit record a 39 per cent leap in new players for the period January to May - even before the World Cup started - with a 22 per cent improvement in turnover as a result. Paddy is nonetheless committed to a low cost base, claiming to have a 39 per cent lower marketing cost per customer acquired than its UK-listed peers.

Mobile revenues made up a full 52 per cent of total online revenues during the period. The Paddy Power iPad app (which counts as mobile) underwent several enhancements, and to coincide with the new football season new pages with game statistics, commentaries and visual analysis features will be added.

Meanwhile, the retail business didn’t fare too badly. In spite of the poor sports results, retail outlets across Ireland and the UK grew profits by 21 per cent, driven by new shop openings and like-for-like revenue growth of 4 per cent. During the period 49 new shops opened, bringing the total up to 548 outlets.

Brokerage Numis expects pre-tax profits of €168m this year, giving EPS of 296ȼ, up from €141m and 252ȼ in 2013.