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Gambling: PaddyPower Profits Decline

3/2/10 - The Irish online and land betting group Paddy Power felt the pain of weaker Irish and UK economies and a run of results that favoured the punter last year, it revealed as it posted its 2009 numbers this week.
Despite a hefty increase in turnover of over a third, the company suffered a slide in pre-tax profits of 15 percent compared with FY 2008, recording a decline to Euro 67.2 million (FY 2008: Euro 79 million) on turnover that soared 36 percent to Euro 2 752 million (FY 2008: Euro 2 101 million).
The betting company invested over Euro 10 million more on advertising than it did in 2008, growing active sportsbook customers by 21 percent over the 2008 advances, with total amounts wagered up by 32 percent as online sportsbook bet volumes rose 55 percent. 
Management's faith in Internet gambling continued to be vindicated as online operations posted a record profit of Euro 45.7 million, 7 percent up on FY 2008, accounting for an impressive 75 percent of the group’s full-year operating profit, compared to just 57 percent in 2008. 
The profit problem was the number of times punters won on sports bets, which resulted in an overall reduction in group gross win of some Euro 29 million over the year.
Strategically speaking, the company enjoyed a good operational year, expanding into Australia through IAS and Sportsbet and gaining access to the soon-to-be-liberated French market via a canny B2B deal with state monopoly Pari Mutuel Urbain.
Business appears to be looking up, according to chairman Nigel Northridge, who said that trading in the current year had so far been satisfactory despite bad weather in the UK.

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