Paddy Power, which offers an online poker room, casino, and sports book, downgraded its profit outlook for 2008, according to a statement released by the company on Wednesday, sending its stock price lower by 5% in the day’s trading. The company had forecasted its profit to be €82 million; the statement issued to the London Stock Exchange today lowers that figure to €75 million, a drop of 8.5%. Overall, however, the company posted a 17% growth in earnings per share during the first six months of the year.
Paddy Power Chief Executive Officer Patrick Kennedy commented in Wednesday’s release, “Much has happened since our last trading update three and a half months ago. The performance of the Irish and U.K. economies has deteriorated and the growth rates in our businesses have slowed accordingly. Paddy Power has always focused on providing better value than the competition, and as our customers face tighter times we have stepped this up in the last three months.”
Once again, the news is not completely bleak for owners of Paddy Power stock, which is traded on the London Stock Exchange under the symbol “PAP.” The growth in earnings per share was 17% in the first half of 2008 and weighed in at 82 cents. Operating profit was up 10% to €45 million. The operating profit of Paddy Power’s online business was up 43% to €21.1 million.
Paddy Power has branched into the Northern Ireland market, acquiring eight retail outlets. It has also sent a development team into Scotland, Northwest England, and Northern Ireland. The retail market has become a focus for Paddy Power, which has its staple green-colored stores spread all over London and other major cities. Kennedy noted, “We will continue to lead and differentiate ourselves in the Irish Retail market. Our expectation for the potential size of our U.K. retail estate has increased to at least 150 shops by 2011.”
The number of customers who participated in Paddy Power’s online betting was up 39% during the second quarter of 2008 in comparison to the second quarter of 2007, which was largely due to the Euro 2008 soccer tournament. Customers from the United Kingdom numbered 143,137; customers from the rest of the world amounted to 75,345. Paddy Power’s earnings release shows that 144,419 customers, or 66% of its clientele, participated in its sports book only.
Paddy Power notes that its online poker business grew. The Irish Open is the staple tournament of the site, and its latest champion was Neil Channing, who won €801,400 for first place. The final table played out on television station RTE TWO. The tournament itself attracted some of poker’s top personalities including Doyle Brunson, Andy Black, Roland De Wolfe, Sorel “Imper1um” Mizzi, Dave “Devilfish” Ulliott, and former Irish Open champion Marty Smyth. Past winners have included Vincent Melinn (2006), John Falconer (2005), Ivan Donaghy (2004), and Noel Furlong (1987, 1989, and 1992).
Shares of Paddy Power finished Wednesday’s trading session down 5.3% to €15.2. In October of last year, the stock had closed as high as €28.68. On July 1st, its share price dropped below €20 for the first time since February.
