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26 Sept 2022

Flutter sees shares soar despite swinging to a loss

Flutter sees shares soar despite swinging to a loss

The company behind Paddy Power and Betfair swung to a loss in the first six months of this year, despite customers returning to its shops as lockdowns lifted.

But strong news out of the company’s US markets, and the hope that it might make a profit in the country this year helped lift shares.

The business said that pre-tax loss reached £51 million in the first half, from a £77 million profit in the same period a year ago.

The loss came on revenue of £3.4 billion, an increase of 11% compared to a year ago.

The business said that the revenue from its high street shops in the UK and Ireland more than trebled. A year ago many of these sites had been closed for prolonged period a year ago because of Covid-19 lockdowns.

The UK retail estate has seen sports and gaming revenue return to their pre-pandemic levels.

But customers have been slower to return to betting shops in Ireland, where revenue is only 69% of 2019 levels.

“The first half of 2022 was positive for the group with significant progress made against the strategic objectives we outlined in March, said chief executive Peter Jackson.

“We expanded our recreational customer base by over one million players in the half and increased the proportion of customers using safer gambling tools to over one third.”

Richard Hunter, head of markets at interactive investor, said that the company’s US business is key to its future.

The company’s FanDuel subsidiary has grown strongly, and has helped Flutter increase its market share to 51%.

“While the unit was loss-making for the half-year, the US turned profitable in the second quarter, underpinning Flutter’s hopes of full profitability for 2023,” he said.

“With the US now accounting for almost a third of group revenues, continued investment is being made in the region and while this is impacting profits in the short-term, the outlook for net revenues has been increased to £2.3 billion to £2.5 billion for the year.”

Share in Flutter rose more than 10% in trading on Friday morning.

The business said that it has not seen any sign of customers walking away. There are certainly no “discernible signs of a consumer slowdown,” it said.

But bosses said they are closely watching out for any signs of a slowdown as customers are squeezed by the cost-of-living crisis.

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