Paddy Power Plc (PWL), Ireland’s biggest bookmaker, fell the most in more than five years after saying that poor sports gambling results will reduce operating profit more than expected.
The company’s takings from sports gambling since July missed Paddy Power’s expectations by about 10 million euros ($13.5 million), with “notably poor results” from Champions League football and the Australian Spring Racing Carnival, it said today in a statement.
The shares fell as much as 9.3 percent, the biggest drop since October 2008, and were down 8 percent at 57.50 euros at 9:36 a.m. in Dublin. The stock has declined about 8 percent this year, the third-worst performance on the ISEQ 20 Index.
Paddy Power Chief Executive Officer Patrick Kennedy is contending with gamblers winning more often at some of the world’s biggest sporting events. The Dublin-based company said in August that its winnings from the British Open and Wimbledon were “very poor.”
Paddy Power now forecasts that operating profit in constant currencies will increase by a low to mid-single digit percentage in 2013, and that currency fluctuations will trim results by 3 percent, it said today. Earnings will be about 11 million euros less that the midpoint of previous guidance, the company said.
“The group’s overall underlying performance has been good” from July 1 to Nov. 17, it said. Online gambling sales growth in Australia accelerated to 26 percent and revenue from gambling machines “has returned to year on year growth.”
Richard Stuber, a London-based analyst at Nomura, said investors should buy the shares given today’s decline.
“We are confident gross win margin should return to more normal levels next year,” Stuber said.
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