Paddy Power Betfair’s Q1 Profits Soar Despite Integration Upheaval and “Worst Ever” Cheltenham
Posted on: May 5, 2016, 07:56h.
Last updated on: May 5, 2016, 07:56h.
Paddy Power Betfair profits sky-rocketed by 36 percent in the first quarter of 2016, the newly-combined company said this week. This is despite a disastrous Cheltenham horse racing festival that cost the company £20 million in just four days.
If it can survive that and come up smelling of roses, we imagine it can also cope with Leicester City winning the English Premier League too. And with the frenzy of betting that is the Euro 2016 soccer championships around the corner, everything points to a strong year for the new betting powerhouse.
Of course, the merger between Paddy Power and Betfair was only finalized on February 2nd, so the financial report released this week has been calculated as though the two businesses had been operating as a single entity since the start of the year.
Overall operating profit grew to £43 million, said the company, a 36 percent increase on the same period last year while EBITDA (earnings before interest, taxation, depreciation and amortization) were up 27 per cent to £59 million. Meanwhile, Revenues grew to £339 million, up 16 per cent on last year.
Growth Despite Upheaval
Paddy Power Betfair with chief executive Breon Corcoran praised his colleagues and the strong results which come at a time of integration and upheaval.
“All four of our brands, Paddy Power, Betfair, Sportsbet and TVG, continue to trade well in a highly competitive environment,” he said. “This good start to the financial year is a credit to our colleagues, particularly at a time when we are bringing together two businesses.
“Our marketing, technology, and operations performed well throughout the key spring racing period and we are now focused on preparations for Euro 2016.”
While online revenues increased 17 per cent to £195 million, revenues at its 601 high street betting shops fell 1 per cent to £67 million on a like-for-like basis. This was mainly due to “poor sporting results,” the company said, such as the aforementioned Cheltenham Festival, where victories for a string of favorites handed the UK bookmaking industry its worst week in living memory.
Corcoran also addressed the restructuring of the newly merged company, which is aiming to create £50 million per year in cost savings, mainly through cutting around 650 jobs.
“The post-merger integration is on-track,” he said. “A strong leadership team is in place and restructuring of the business has commenced. We are working to bring the best of each business to the combined group and customers are starting to see some early benefits as we roll out product features across the brands.”
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