Paddy Power bets on €390m share buyback

 
Joseph Millis
IN TYPICALLY exuberant style, Irish bookie Paddy Power announced yesterday that it would return €392m (£285m) to shareholders after it could not find any compelling acquisitions to spend its cash on following a year of record profit growth.

Declaring it had “more ups and downs than Taylor Swift’s love life” in 2014 and describing a run of unlikely football results as “the betting equivalent of Billy Bob Thornton landing Angelina Jolie”, Paddy Power said its operating profit rose 19 per cent to €163.8m last year.

That was ahead of the €162.3m forecast by analysts and, like British rival William Hill, represented record profit growth, helped by last year’s World Cup – the industry’s largest event.

The move to hand shareholders back €8 a share, on top of a 13 per cent increase in full-year dividends, pushed shares eight per cent higher, and comes after chief executive Andy McCue took over in January following Patrick Kennedy’s 10 years in charge.

“All we’re saying is that right now, nothing looks better than our organic strategy. That may change,” chief financial officer Cormac McCarthy told Reuters in a telephone interview.

“Giving back money to shareholders and taking on very modest debt doesn't mean we've no flexibility. We could gear up to three times, we’re only gearing up to between zero and one times and that debt will pay down very quickly if we want it to.” He added that 2015 had started well, with sportsbook stakes up 18 per cent online and eight per cent year-on-year in shops.

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