Paddy Power Betfair stays upbeat after profits blow
Bookmaker Paddy Power Betfair has revealed costs of last year's merger left it nursing annual losses of £5.7m, but it saw revenues jump 18% higher after a "transformational" year.
The group - formed after the merger of Paddy Power and online rival Betfair in February 2016 - said cost benefits of the tie-up were ahead of schedule, while the Brexit-hit pound had provided a boost to revenues.
The bookmaker said that while the bottom line loss showed the merger costs, its underlying results "best reflects" its performance last year - with earnings up 35% at £400m on revenues of £1.55bn.
Breon Corcoran, chief executive of Paddy Power Betfair, said: "Last year was a transformational year for Paddy Power Betfair, with much of the integration of the businesses completed sooner and more efficiently than expected."
The robust underlying performance comes despite a mixed year for bookies, starting with a run of favourites winning at last year's Cheltenham Festival horse racing event and capped by a string of punter-friendly football results in December.
But Paddy Power said "unfancied" results at the Euro 2016 football tournament last summer helped offset these losses, leaving overall net revenues for the group sportsbook "marginally lower than normal expectations".
Revenues were also helped by a £78m fillip from the pound's plunge since the Brexit vote, which benefited sales from outside the UK when translated into sterling.
With the currency effect stripped out, revenues rose 11%.
Paddy Power, which is preparing for this year's Cheltenham Festival next week, said the new financial year had started in line with forecasts, with group sportsbook stakes so far up 12% on a constant currency basis.
Online stakes are up 9% on a constant currency basis and up 7% across its betting shops.
But shares fell 4%, with analysts at Liberum noting a "disappointing" final three months of 2016 for Paddy Power and "operational challenges" ahead.
They said: "It seems likely that operational challenges will continue around the performance of cross-sell to sports customers and the investment required to stimulate growth."