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Paddy Power owner fears Covid-19 sport restrictions will remain in place until August resulting in €121m hit
17th March, 03:01Paddy Power owner Flutter Entertainment is assuming that Covid-19 restrictions will remain in place until the end of August, resulting in the cancellation of events such as Euro 2020 and leading to a hit to its earnings of between £90m and £110m (€99m and €121m).
Its shares in London sank 14pc by mid-afternoon yesterday. It also warned that if its retail outlets in Ireland and the UK were closed, and behind-closed-doors horse racing events were cancelled, the hit could be much worse.
Flutter Entertainment CEO Peter Jackson said the challenge facing the business and the wider industry was "unprecedented in modern times".
Sporting events across Europe, the United States and elsewhere are being cancelled in an effort to slow the spread of the coronavirus.
"This will obviously have a material impact on the revenue and earnings of the group which, in 2019, generated approximately 78pc of its revenues through bets placed on global sporting events," it told investors.
Flutter Entertainment generated revenue of £2.1bn last year and pre-tax profits of £136m. Its profits slumped 38pc last year as it shouldered higher taxes and duties, and saw increased regulatory moves for the betting industry.
Flutter also owns the online FanDuel sports betting business in the United States, and in Australia owns the market-leading online Sportsbet brand. The group said that in a scenario where restrictions remained in place until the end of August, which would include the full suspension of Australian sports and the cancellation of Euro 2020, earnings before interest, tax, depreciation and amortisation (ebitda) would be reduced by between £90m and £110m.
But the prediction is based on the assumption that its betting shops in Ireland and the UK remain open, and that scheduled Irish, UK and Australian horse racing fixtures continue to run, "albeit behind closed doors".
"Should horse racing be cancelled in the three regions and our UK/Irish shops be closed, we estimate that this would incrementally reduce group ebitda by approximately £30m per month," it warned.
"While our near-term profitability will be impacted by the essential measures being taken globally, the board will remain focused on protecting shareholder value and managing the business through these turbulent times," said Mr Jackson.
The group said that prior to sporting event cancellations, trading in the first quarter had been ahead of expectations.
Flutter is in the process of acquiring the Stars Group, which is based in Canada.