Irish trade tougher for Paddy Power

Leading Irish bookmaker Paddy Power said the "deteriorating economic conditions in Ireland and the UK" were having an effect on its trading, although noted it still expected to post "underlying operating profit for 2008 of approximately 75m [euro] (64m [pounds sterling])--in line with consensus market forecasts".

Updating the market on trading for the 19-week period from 1 July to 10 November 2008, Paddy Power said it would hit its 75m [euro] forecasts, "assuming a normal run of sporting results over the remainder of the year". Such ah outcome would translate into EPS growth of some 10% over 2007, although sterling depreciation is expected to reduce operating profit by approximately 5m [euro] this year.

The bookmaker said "We continue to respond [to the economic crisis] by providing stand out value and tightly managing our costs whilst also investing to improve the proposition to customers."

Overall, sporting results were said to be "reasonable, with some of the impact of the adverse results reported in August recovered later in the period. However this was partially offset by unusually high racing cancellations in September".

Within the online and telephone sportsbooks, the amount staked grew by 13% in constant currency, compared to the same period last year.

Online gaming gross win grew by 15% in constant currency, broadly in line with expectations after exceptionally high growth in the first half of 2008 against softer comparatives.

The online channel increased its contribution to over 60% of group operating profit in the period.

Turnover in the retail businesses has declined, however. During October when race cancellations were not significant, like-for-like turnover declined by 9% in both Irish and UK retail. Within UK retail this was partially as a result of turnover in the comparative period being boosted by a competitive advantage from Turf TV pictures.

Machine gross win within UK Retan continued to grow strongly with like-for-like growth of 22% in the period in constant currency.

The Irish Minster for Finance announced in October his intention to double the rate of betting tax payable on amounts staked in Irish Retail from 1% to 2% effective from 1 January 2009, which will reduce operating profit by 9 [euro] to 10m [euro] in 2009.