Bookmaker blames bad weather and Arsenal for poor returns

Paddy Power Betfair has blamed factors including a record number of weather-related horse racing cancellations and Arsenal’s poor away form in the Premier League for a dip in first quarter sales.

Horse racing fans were left with little to bet on after the heavy snowfall dumped by the “beast from the east” led to the cancellation of about 400 meetings in the UK and Ireland between January and March, equivalent to 14% of all scheduled races. In the first quarter of 2017, just 4% of fixtures were called-off.

In a trading update, the bookmaker said customers were also hit by unexpected results from big clubs such as Arsenal between November and February, which contributed to a 2% drop in revenue to £408m in the three months to 31 March because it put people off placing bets.

The north London club won only two away matches in the Premier League during that period, at Burnley and Crystal Palace.

“Customers like to win,” a spokesperson for the bookmaker said. “If you have a sustained run of bookmaker-friendly results it will have a knock-on effect on customer activity.”

In a potential sweetener for shareholders, the FTSE 100 company announced plans to return £500m of cash to investors over the next 12 to 18 months through a share buyback programme.

Its chief executive, Peter Jackson, said Paddy Power had made good progress, but the City appeared to disagree, with shares down 6%, making it the biggest faller on the FTSE 100 or 250.

Underlying earnings in the first quarter fell 8% to £102m, and the company is expecting earnings for the full year in 2018 to be between £470m and £495m, below City expectations of about £500m.

Greg Johnson, travel and leisure analyst at Shore Capital, said the first quarter performance was disappointing and lowered the investment group’s recommendation from hold to sell.

“We do not believe that this slower growth and potential headwinds are fully factored into the [share] price,” he said.

Revenue at Paddy Power’s Australian business, Sportsbet, rose 6% in the first quarter, despite adverse sports results.

“Sportsbet continues to perform well and is targeting further market share growth, with additional investment planned to take advantage of any disruption arising from market consolidation and the introduction of increased taxes,” Jackson said.