Paddy Power Betfair swings to loss on merger costs
The betting company sees profit jump as benefits of the merger kick in faster than expected.
UK.- The £7 billion merger of Paddy Power and Betfair resulting on bookmaker Paddy Power Betfair has reported a jump in profits a year earlier than expected. The merger was completed in February, and it dragged the combined gambling business to a substantial pre-tax loss of £49.3 million in its first half, as it helped puncture the brunt of £195 million merger costs.
Paddy Power Betfair performed well at horseracing events such as Cheltenham and the Grand National, and also football’s Euro 2016. Revenues increased by 18 percent to £759 million in the six months to June 30, with its underlying profits rising to £136.4 million in the period. Profits in the second quarter jumped by 40 per cent to £105 million.
Breon Corcoran, chief executive of Paddy Power Betfair, said that they have sustained good momentum through a period of considerable change. “The restructuring is now largely complete and the merger synergies are being delivered ahead of schedule. While our industry remains highly competitive and is exposed to the prevailing economic and regulatory environments, our strong market positions, increased scale and enhanced capabilities position us well for sustainable, profitable growth.” Corcoran commented that the company’s pro forma earnings for the year would be between £365 million and £385 million.
These results appear a few days after Rank Group and 888 drop pursuit of William Hill, and the merger of Paddy Power and Betfair, along with the future Ladbrokes and Gala Coral combination have raised stakes in the sector. “If you believe scale is important, and we do, then there will be further consolidation. It is very early to be guessing how other consolidation will play out,” he stated.
