y Power Betfair sees 2016 earnings hit mid-point

Updating investors, Paddy Power Betfair announced on Monday that revenue in FY2016 was up 18% year-on-year to £1,551m.

The recently merged business estimated that its full-year earnings hit the mid-point of its guidance despite a run of adverse sports results at the end of the year, including the US presidential election result that cost the group nearly £5m.

In its online division, the company saw its Q4 revenue reduced by 3% year-on-year, despite a 15% growth in sportsbook stakes.

The group said that lower-than-expected marketing and staff expenses had helped offset the dent in revenues in the final quarter of 2016.

In November, the operator raised its full-year core earnings (EBITDA) forecast to a range of £390-405m from a previous range of £365-385m citing a boost in the sterling value of its euro revenue, last year’s merger and favourable sporting results.

“This outcome disguises a better underlying performance than we were forecasting,” says Davy Stockbrokers analyst David Jennings, who predicted EBITDA of £408.8m.

“From analysing the statement, we estimate that had results been ‘normal’, EBITDA for the year would have landed north of 420 million pounds,” he adds.

The benefits of the Group’s geographical diversification were highlighted by a strong performance from Sportsbet in Australia, where Q4 stakes growth of 25% and revenue growth of 18% helped to partially offset the poor gross win margins in its European businesses.