Paddy Power Betfair synergies are on track, says CEO

Paddy Power Betfair synergies are on track, says CEO

Wednesday, May 4, 2016 Totally Gaming
Breon Corcoran was positive about the combined company's first few months of trading

Paddy Power Betfair (PPB) said it is on track to deliver its predicted synergy savings of £50m (€63m/$73m) as the company announced its first quarterly figures since its formation.

For the three months to March 31, the company generated revenue of £339m, which was 16 per cent up on the separate figures posted by Paddy Power and Betfair during Q1 2015. The income growth was down when compared to the rises of 24 and 21 per cent reported by Paddy Power and Betfair respectively during their final three months of trading ahead of February’s merger. 

Earnings before interest, tax, depreciation and amortisation (EBITDA) jumped 27% to £59m, while operating profit increased by 36 per cent to £43m.

In a statement, PPB said synergies are beginning to be realised through the restructuring of teams, rationalisation of some duplicated roles and the consolidation of office locations. Last month, it was reported that the company is to slash 650 jobs in the UK and Ireland, while it is also believed to be considering the merger of its £40m marketing spend.

“The post-merger integration is on-track,” said PPB chief executive Breon Corcoran. “A strong leadership team is in place and restructuring of the business has commenced. We are working to bring the best of each business to the combined group and customers are starting to see some early benefits as we roll out product features across the brands."

The trading update reported that online revenue from regulated markets was up 21 per cent and unregulated revenues fell by 14 per cent, mostly due to the impact of exiting from Portugal last July. Geographically, the fastest sales growth was from Australia, where revenue was up 25% to £58m, while US revenue grew by 22% to £20m.

"All four of our brands − Paddy Power, Betfair, Sportsbet and TVG - continue to trade well in a highly competitive environment," said Corcoran.

TotallyGaming.com says: “A drop in share price today shows that the market is still not convinced by the merger of these two gaming giants. Credit Suisse and Morgan Stanley have recently released contrasting analyses of PPB’s ability to deliver on synergy promises, and it remains to be seen whether the company can win over its doubters.”

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