Trump and United star give bookies a kicking
THE unlikely pairing of Donald Trump and Zlatan Ibrahimovic left Paddy Power Betfair nursing a £250million-plus stock market loss yesterday.
Shares in the £7billion betting heavyweight reversed 380p to 8295p, making it the biggest FTSE 100 faller, as it admitted taking a £40million hit from customer-friendly results in the final three months of 2016.
Trump’s unexpected victory in the US Presidential election cost it £5million as it paid out to punters who backed him for the White House. It had already paid out £800,000 on a Hillary Clinton win just before last November’s poll.
Like other bookies, it was hurt by a run of adverse football results, with nine out of 10 favourites winning their matches three weekends in a row, which triggered lots of winning accumulator bets.
Manchester United striker Ibrahimovic’s run of 12 goals in 12 games added to the company’s woes because he is always the most heavily backed Reds’ player to find the net.
This led to a 3 per cent drop in Paddy’s fourth-quarter online revenue from the previous year despite 10 per cent growth in sportsbook stakes in constant currency terms.
Total quarterly revenue was flat at £388million when adjusted for currency effects. Over the whole year, it was up 11 per cent to £1.55billion. Paddy said that despite the sporting and political setbacks, it expects to deliver annual underlying pre-tax earnings in the middle of its previously guided range of £390-405million.
It has benefited from a strong performance in Australia and incurred lower than expected marketing and staff costs.
Peel Hunt analyst, Ivor Jones, said: “We doubt there is anything fundamentally broken in the sportsbook and we are encouraged that online staking increased by 10 per cent.
“With ‘normal’ sporting margins we believe Paddy would have pulled a useful forecast upgrade rabbit out of its hat. Looking through the volatility of sporting results we believe it has multi-year growth potential and will continue to turn its scale to its advantage.”