Shares in bookmaker Paddy Power plummeted by over 22% in Dublin today after the company warned that profits for 2005 would be lower than expected.
In a trading update, Paddy Power said poor horse racing results had affected its performance in the second half of this year. It said gross win - the amounts bet minus the amount returned to customers as winnings - had been around €4m below expectations over the past three weeks. The company had signalled this in its interim results presentation in late August, and this morning said the trend had continued.
Paddy Power said it now expected operating profits of around €30m for the full year, around €5m lower than analysts had expected.
The company has now reduced its expectations for gross win percentages in its retail betting shops and telephone betting operations by one point and half a point respectively. But it upped its online betting forecast by half a point.
While the company blamed racing results for most of the shortfall in its betting shops, it added that the Irish market was 'in the process of structural change'. Paddy Power also predicted that the Budget could lead to nationwide tax free betting, boosting turnover but increasing competitiveness in the Irish market.
The company meanwhile said that the outcome of a recent court case between Irish bookmakers and the British Horseracing Board on racing information rights would lead to savings of €2m in 2006.
Shares in Paddy Power closed €2.95 lower at €10.40 in Dublin this evening.
