LONDON (Alliance News) - Irish bookmaker Paddy Power PLC on Tuesday posted strong growth in both profit and revenue for 2014, which prompted a 13% increase in its dividend for the year plus an additional cash return to shareholders of EUR392 million.
As it had expected, Paddy Power said it delivered double digit earnings growth in 2014, recording a pretax profit of EUR166.6 million, up from EUR141.0 million, as net revenue rose 18% to EUR881.6 million, up from EUR746.0 million in 2013, driven by strong growth in mobile, online and new customer acquisitions.
Earnings per share grew by 18% and the group's proposed final dividend makes for a total 2014 dividend of EUR1.52 per share, an increase of 13% versus 2013. What's more, Paddy Power proposed an additional cash return to shareholders of EUR392 million, equivalent to EUR8.00 per share from surplus cash and planned debt raising. It said shareholders will be able to elect to sell or receive a dividend on newly issued shares, followed by a share consolidation.
"2014 was an excellent year for Paddy Power with robust double digit growth in stakes, revenues and profits, and a marked increase in customer acquisition. We are strongly positioned in the key growth areas of online and mobile, whilst also benefitting from a differentiated and resilient retail presence," said Chief Executive Andy McCue in a statement.
Dublin-based Paddy Power said the strong profit growth was achieved despite absorbing EUR11 million from new taxes, increased product fees and adverse exchange rate movements.
"As I look ahead, the pace of change in the sector and in the wider consumer environment is intensifying," McCue said "We have re-organised the business to significantly sharpen our focus on product differentiation and innovation, and to increase in-house development. This, combined with clear investment priorities, will pave the way for sustained performance and market leadership."
Paddy Power said it has started 2015 well, and has been boosted by a positive impact from recent euro depreciation. Sportsbook stakes were up 18% online and like-for-like growth of 8% in retail in constant currency during the first few weeks of 2015 to February 26.
"Sports results have been broadly in line with our expectations, as compared with adverse results in the equivalent period last year. Although we face well flagged new taxes and regulations this year, the recent depreciation of the euro since our last update, if sustained, would increase operating profits by approximately EUR5 million in 2015," the company said.
The group's UK retail operating profit was up 50% to EUR21.2 million, while like-for-like net revenue rose 8%. It opened 55 new shops in the UK during 2014, and now operates from 322 shops.
Its Irish retail operating profit rose 15% to EUR15.6 million, as like-for-like net revenue increased by 3%. Having opened 20 shops during the year, the group now operates 243 shops in Ireland.
Paddy Power's online operations was a stand-out performer during the year, with new customer acquisitions up 28%, active customers up 24% and net revenue up 19% to EUR553m. Its online operating profit increased 21% to EUR126.6 million. It recorded strong growth online in Australia.
The group said Italian net revenue increased to EUR7.9 million, but said that overall market growth remains slower than expected.
"We are undertaking a review of the opportunity which will allow us to position our business better for this market reality. This review will be completed in the coming months," the company said.
By Rowena Harris-Doughty; rowenaharrisdoughty@alliancenews.com; @rharrisdoughty
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