ii view: Flutter Entertainment reports mixed results

by Keith Bowman from interactive investor |

Flutter Entertainment bets on diversification as increased taxes and regulation hinder profits.

Half-year results  

  • Revenue up 18% to £1.02 billion
  • Adjusted profit (EBITDA) down 10% to £196 million
  • Dividend payment unchanged at 67p per share
  • Guidance in line with market expectations

Chief executive Peter Jackson said:

“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.”

ii round-up:

Formerly known as Paddy Power Betfair, the merger of three small Irish booking chains in 1988 saw the company opening for business. 

Today Flutter Entertainment (LSE:FLTR) is a global sports betting, gaming and entertainment provider. Employing over 8,000 people, its brands include Paddy Power, Betfair, FanDuel, Sportsbet, TVG and Adjarabet. 

The group reported mixed half-year results. Revenues rose but profits retreated. 

Changes to regulation and taxes hampered profits. Higher operating costs and investment in the US sport-betting markets also dragged. 

Online growth and the prior acquisitions of both FanDuel and Adjarabet feed into revenue growth. 

Management full year expectations were left unchanged. The share price rose by 6% in afternoon UK stock market trading. 

ii view:

Flutter has outlined a number of initiatives it will pursue to generate growth including growing Betfair internationally and strongly targeting the US market place. Adding diversification is now central in its model. 

For investors, a forward price earnings valuation marginally below both its three and ten-year averages offers encourage, as does a historic dividend yield in the 3% region. But with governments globally under pressure to raise tax revenues and reduce debt, we believe the gaming industry is likely to remain a relatively easy target. 

Positives: 

  • Launched ‘My Betfair Rewards’ in Ireland
  • Targeting US growth

Negatives:

  • Gaming taxes in both Ireland and Australia have recently increased
  • UK is a very competitive market

The average rating of stock market analysts:

Hold

These articles are provided for information purposes only.  Occasionally, an opinion about whether to buy or sell a specific investment may be provided by third parties.  The content is not intended to be a personal recommendation to buy or sell any financial instrument or product, or to adopt any investment strategy as it is not provided based on an assessment of your investing knowledge and experience, your financial situation or your investment objectives. The value of your investments, and the income derived from them, may go down as well as up. You may not get back all the money that you invest. The investments referred to in this article may not be suitable for all investors, and if in doubt, an investor should seek advice from a qualified investment adviser.

Full performance can be found on the company or index summary page on the interactive investor website. Simply click on the company's or index name highlighted in the article.

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