Financial Ups and Downs But Flutter Entertainment Buoyant Following Interim Report

Flutter Entertainment, the new trading name of Paddy Power Betfair, has seen revenue increase but profits take a knock in the first half of 2019.

Flutter Entertainment revenue

Flutter Entertainment (formerly Paddy Power Betfair) is in a positive position following its H1 financial report. (Image: Proactive Investors)

Publishing its H1 results on August 7, Flutter Entertainment showed that revenue was up 18 percent year-on-year. However, despite income increasing from £867 million to £1.02 billion, underlying profit before tax was down 24 percent.

According to the interim report, the “strong” revenue increase was due to organic growth and acquisitions.

Flutter Entertainment Confident Despite Challenges

Alongside its takeover of Adjarabet, Paddy Power Betfair has been increasing its presence in the US this year.

However, even though it expects its North American investments to pay dividends, it won’t be this year. At the current rate, the company expects US losses to top £55 million as PR efforts in recently regulated sports betting states continue.

As news of Flutter Entertainment’s interim report flowed, the company’s share price increased. After improving by 2.88 percent to £63.83 on August 7, the price continued climbed to just over £66 per share on August 8.

Despite revenue increasing, tax, duties and new betting restrictions have marred an otherwise positive financial update. As per the report, underlying EBITDA was lower than expected due to “tax, regulatory changes and market switch offs.”

Had it not been for these factors, underlying EBITDA would have improved by 15 percent.

One of the main issues for Flutter Entertainment was the change to fixed odds betting terminals (FOBTs). With the live betting terminals now restricted to maximum bets of £2, gaming revenue has taken a hit.

In Q2 alone, the new limits impacted gaming revenue by -44 percent. This contributed to an overall impact of -21 percent.

Online Growth Generating Traction

While FOBT changes are likely to hurt for at least the rest of 2019, Flutter Entertainment bosses are confident in the company’s current position.

As well as Q2 online activity improving by 16 percent year-on-year, overseas interests will soon bear fruit. More US states are moving to regulate sports betting, something the Irish bookmaker is eager to take advantage of.

Although it faces competition from Ladbrokes Coral and William Hill, the Paddy Power Betfair brand has established a strong a footing in the US. This, combined with growth in regions such as Australia, has allowed Flutter Entertainment to project full-year earnings of between £420 million and £440 million.

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