Paddy Power Plc, Ireland's largest bookmaker, lowered its annual profit forecast after customers placed winning bets on Irish golfer Padraig Harrington and on the results of games at soccer's European Championships.
Operating profit for the year will be about 75 million euros (US$110.8 million), the Dublin-based company said yesterday in a statement, less than its previous forecast of 82 million euros. First-half net income increased 18 percent to 41.9 million euros, boosted by a tax refund, it said.
Paddy Power shares fell as much as 9.5 percent in Dublin trading yesterday, the most in almost three years.
About two-thirds of the games at soccer's European Championships went in favor of customers, and Paddy Power also lost money when Harrington won both the British Open and the US PGA championship, Chief Executive Officer Patrick Kennedy told Bloomberg News. Gamblers usually back favorites, benefiting bookmakers when outsiders win.
"A reversal of fortunes for customers has impacted Irish bookmakers in particular," analyst Matthew Gerard at Investec Securities in London said in a note. "The exposure of the sector to the Irish and UK consumer will clearly create near-term uncertainty." Investec has a "buy" rating on the stock.
"Those results do cost us, that is the ebb and flow of bookmaking," Kennedy told analysts, adding that Paddy Power has also been affected by a deterioration in the UK and Irish economies.
