Publishing its Q1 trading update (period ending 31 March), FTSE100 betting group Paddy Power Betfair (PPB) has reported a tough opening for 2018, as the firm’s corporate performance was impacted by several factors.
Updating the market, PPB reports a 2% decline in group revenues to £408 million (Q1 2017: £416 million).
The betting group detailed that its punters had been discouraged by a ‘series of sustained bookmaker friendly sports results recorded from November to February’.
Furthermore, PPB’s racing markets had suffered from a number of event cancellations due to Q1 2018’s extreme UK weather conditions.
Abroad, PPB details that the solid underlying growth of its Australia division has been offset by adverse sporting results, combined with a tougher regulatory environment in which the division operates.
These adverse factors would see PPB report an 8% decline in underlying EBITDA to £102 million (Q1 2017: £111 million).
Closing Q1 2018 trading, PPB governance would declare group underlying profits of £80 million, down 12% on corresponding Q1 2017’s £91 million.
At present, PPB governance expects its full-year 2018 underlying group EBITDA to be between £470-495 million range, in-line with its 2017 performance. Corporate governance details that it will move to increase investment within its Australian division, whilst also exploring US market opportunities, should regulatory conditions change.
Closing its trading update, PPB would confirm a £500 million cash return to its investors, as part of the betting group adopting a ‘more efficient capital structure’.
Presenting his first trading update, as Paddy Power Betfair Group CEO, Peter Jackson commented on corporate performance:
“We have made good progress against our strategic priorities. In Europe, the successful completion of our platform integration has resulted in a meaningful improvement to the Paddy Power product. This has seen the brand’s gaming revenue returning to growth from February and a significant uplift in Cash Out usage and in-running betting during the Cheltenham Festival.
In Australia, Sportsbet continues to perform well and is targeting further market share growth, with additional investment planned to take advantage of any disruption arising from market consolidation and the introduction of increased taxes.
In the USA, TVG and Betfaircasino.com have good momentum and we are continuing to make preparations for any positive regulatory changes. Notwithstanding lower profits in the first quarter, we expect full year underlying EBITDA of between £470m and £495m.
We are today announcing that we intend to return £500m of cash to shareholders, representing a step towards a more efficient capital structure, whilst retaining substantial strategic flexibility.”