LONDON (Alliance News) - Betting and gaming company Paddy Power PLC Tuesday said it experienced its "worst two weekends ever for football profitability" in January and March, after football results went heavily against it.
Paddy Power also announced that Chief Executive Patrick Kennedy will step down in April next year.
Paddy Power said strong growth in 2013 accelerated in 2014, with sportsbook stakes up 20% in online, and up 5% on a like-for-like basis in retail in the first 18 weeks to May 11, which it said was boosted by new customer acquisitions, with first-time bettors up 16% in the period, compared to an 8% increase last year. It said that mobile accounted for 54% of its total online revenue in April.
However, the betting firm said that, after unfavourable sporting results in January, it was hit again by adverse results in March, as football results again went heavily against bookmakers. An unusually high number of favourites won their football matches, meaning bookmakers had to pay out large winning.
"The adverse results in the period were concentrated in football resulting in our two worst weekends ever for football profitability," the company said in a statement.
"This contrasts with overall positive sports results in the equivalent period last year, which will unfavourably impact year-on-year first half results," it added.
Paddy Power said that overall, it expects the impact of those bad sporting results to be largely offset by positive top-line momentum, customers recycling their winnings back into the business, and favourable exchange rate movements, as well as the later-than-expected introduction of the Irish online and phone betting tax.
The group said that total online net revenue grew by 1% in the period, as 12% growth in eGaming/B2B net revenue offset the adverse impact of year-on-year sports results.
In its UK and Irish online business, paddypower.com, the group said investments made in marketing, product and value has driven sportsbook growth of 16% in stakes and 12% in active customers.
Within its Australia business, it said it continues to take significant market share and also benefited from a higher gross win percentage, which drove a 38% increase in total Australian net revenue.
Paddy Power said that overall market growth in active customers in its Italian online business has been slower than hoped in recent months, resulting in less opportunity to win new customers and take share.
"With football accounting for over three quarters of sports betting in Italy, the forthcoming World Cup is a key opportunity for customer acquisition," it said in a statement.
The group's retail business, its shops, saw like-for-like retail stakes grew by 5% in the period, 4% in Ireland and 8% in the UK.
Paddy Power said it has opened 25 shops in the year to date in the UK and Ireland, taking its shop estate in the UK to 280 units and 234 units in Ireland.
Paddy Power also announced the departure of Chief Executive Kennedy. Kennedy joined the group back in 2005 and has been chief executive since January 2006.
Paddy Power said it is now commencing the succession process to replace Kennedy and will consider both internal and external candidates to fill the role.
Shares in Paddy Power were down 3.8% at 56.78 pence Tuesday morning.
By Rowena Harris-Doughty; rowenaharrisdoughty@alliancenews.com; @rharrisdoughty
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