Paddy Power Betfair, the giant gambling company, has announced loss of £47.5 million in the first six months of 2016, leading to the company share value falling to £96.90 or by 2.6% per share.
Last year, the company announced £106.5 million in profit. This year, Betfair and Paddy Power merged at a cost of £195.1 million, £29 million of which is linked to advisory fees. In spite of its loss, the remaining financial figures remain positive, indicating that the company’s financial health is excellent.
The company’s sportsbook stakes experienced 21% increase while its total net revenue shot up to £759 million or by 18%. While its gross profit rose to £584 million by 19%, its underlying operating profit has increased by 39% or £147.6 million. As its marketing and sales costs increased by 31%, its operational costs also increased. The company has predicted savings of £65 million through cost-saving strategies by 2017, which is much more than the £50 million savings estimated by 2018.
Paddy Power Betfair Breon Corcoran stated to the London Stock Exchange: “Paddy Power Betfair has 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.”
He further said that the company is exploiting business capabilities and unique assets, chiefly in marketing, trading, and technology, to create world-class operations. He assured that Paddy Power Betfair’s market position remains strong, marked by enhanced capabilities and increased sales, owing to which it can maintain profitable and sustained growth in spite of the highly competitive nature of the industry.
Corcoran also said that Paddy Power Betfair is planning to acquire certain betting shops that Ladbrokes and Gala Coral have placed on sale. Gala Coral as well as Ladbrokes are planning to merge into one entity at the cost of £2.3 billion. However, regulators say that the two companies can complete the deal only if they sell the betting shops the two companies own. Gala Coral and Ladbrokes own around 350 to 400 betting shops.
Although Paddy Power Betfair is interested in acquisitions, purchasing betting shops belonging to Ladbrokes and Gala Coral is not a priority for the company. This is because of the costs incurred owing to the merger of Betfair and Paddy Power. The CEO said that the company would be well-positioned to make an acquisition if “the right assets came up at the right price.”