Online Gaming Drives Profit Growth at Paddy Power

As the company prepares to enter the French online sports betting market though an outsourcing contract with PMU, Irish bookmaker Paddy Power said this morning that it was confident of meeting the current market consensus for 2009 diluted earnings per share of approximately 113 cents, with profits generated online now accounting for 80% of the company's total.

Paddy Power said that turnover had grown strongly during the 19 week period ended November 10th, assisted by greater customer winnings in 2009, the high level of race cancellations in the comparative period last year, as well as continued market share growth.

The company said that sporting results overall were adverse, although all channels experienced gross win percentages above their expected ranges since the start of October.

Since the completion of its two Australian acquisitions, Sportsbet and International All Sports in July and October respectively, the total amounts staked in the combined business have increased by 24% in constant currency in the period up until November 10th, with growth of 47% in the online channel. The number of active customers at Sportsbet alone has grown by in excess of 100% year-on-year during the period.

The profits from Australia further increased the proportion of the company's profits generated online to approximately 80% during the period, with the online games business in particular performing strongly, leveraging growth in the online sportsbook customer numbers.

Amounts staked on the company's retail and non-retail sportsbooks grew strongly by 11% and 24% respectively during the period, with the retail sector benefiting from the addition of 22 betting shops in the UK so far this year. Gaming and machine gross win growth increased by 20% in constant currency, excluding the impact of machines in new shops.

As at October 31st the company had net cash of €75 million, excluding its 51% owned Australian operations.

Shares in Paddy Power plc (Co. Profile) (LSE:PAP) have gained 5.92% to €23.60 per share in London this morning following the announcements.