August 7, 2019 / 7:14 AM / 3 months ago

Newly named Flutter hurt by higher betting taxes

DUBLIN (Reuters) - Flutter Entertainment FLTRF.I, the gambling group formerly known as Paddy Power Betfair, suffered a 10% fall in first half earnings and forecast a full year dip in line with expectations as significant betting tax increases kicked in.

Firms in the increasingly competitive gambling sector are seeking to offset tax hikes and tighter regulation with higher revenues and Flutter grew its half year sales by 18%, driven by its established online divisions and developing U.S. business.

Earnings before interest, tax, depreciation and amortisation for the first six months still fell to 196 million pounds after an incremental 47 million pound hit in taxes and duties. Excluding these, earnings would have grown by 15%, Flutter said.

Flutter estimated earlier this year that the gross impact on its 2018 EBITDA from incoming regulatory, tax and product fee changes would have been around 118 million or just over a quarter of its 451 million pounds of annual earnings.

It estimated a drop in underlying earnings to between 420 and 440 million pounds for the year to end-December, excluding an estimated 55 million pound U.S. loss. Five analysts polled by Refinitiv forecast full year EBITDA of 374 million pounds.

Half year revenues rose by 16% in the Dublin-based group’s Australian Sportsbet brand, one of six operating under the new Flutter moniker.

In the U.S., where it merged with fantasy sports company FanDuel last year as the potentially huge market opens up, sales jumped 46% on a pro-forma basis while there was growth of 8% in its main online division dominated by Paddy Power and Betfair which were most impacted by the regulatory upheaval.

“All divisions are performing strongly on an underlying basis and have responded well to the challenges faced. We are pleased with the progress we are making to build a more diversified and sustainable business,” Chief Executive Peter Jackson said in a statement.

Reporting by Padraic Halpin; Editing by Alexandra Hudson

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