Paddy Power eyes bumper World Cup as profit guidance dents shares

By Padraic Halpin

DUBLIN | Wed Aug 28, 2013 4:28pm BST

DUBLIN (Reuters) - Irish bookmaker Paddy Power held out the prospect of bumper takings from next year's soccer World Cup after full-year profit guidance for 2013 disappointed investors.

Shares in the group, hit by punter-friendly results in what is a quiet year for major sporting competitions, were down 0.3 percent at 59.9 euros by 1514 GMT, continuing a falling trend from highs above 70 euros earlier in the year.

Davy Stockbrokers cut its rating on Paddy Power to 'underperform' in late April when its shares traded at 67 euros, saying fair value was 57.80 euros. The stock has since fallen 11 percent.

Paddy Power, which has posted stellar top-line profit growth in recent years, said on Wednesday that operating profit rose 12 percent to 75.4 million euros (64 million pounds) in the first half with revenues up 22 percent, driven by the group's market-leading online division.

The Dublin-based group said it was on track for low- to mid-double-digit full year operating profit growth in constant currency terms.

Chief Executive Patrick Kennedy forecast turnover from the 2014 World Cup of over 100 million euros, compared with 86 million in 2010, and expected the competition to deliver a major boost to its new business in soccer-mad Italy.

In contrast to rival William Hill, which suffered a slow start to its expansion into Australia, turnover at Paddy Power's Sportsbet brand grew at its fastest rate to date with profit and customers also growing by over 30 percent.

The bookie, which is set to be hit by new betting taxes in Ireland at the end of 2013 and Britain a year later, is seeking to capitalise further on fast-growing online and smartphone markets which now account for over 75 percent of its profit.

This week it begins trialling the first real money sports betting product on Facebook with a view to rolling it out across the social network in a matter of weeks.

"For operators who get this right, it is an enormous opportunity," Kennedy said.

(Editing by David Cowell)

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Solid domestic demand fuels bumper growth in Germany

A construction worker is seen while working at a construction area in Munich downtown July 15, 2013.

Credit: Reuters/Michaela Rehle

By Alexandra Hudson

BERLIN | Fri Aug 23, 2013 5:20am EDT

BERLIN (Reuters) - Broad-based domestic demand drove the strongest German quarterly expansion in more than a year between April and June, fuelling optimism Europe's largest economy will outperform in 2013 and support the nascent euro zone recovery.

Details released on Friday showed a construction flurry after the harsh winter, firms' strong appetite for machines and equipment and healthy private consumption all underpinned a 0.7 percent quarterly rise in gross domestic product (GDP)

Analysts said Germany's bounce-back could prompt upwards revisions to 2013 growth forecasts and support the tentative recovery in the euro zone economy, which returned to growth in the second quarter after 18 months of contraction.

"The composition of the growth is very good. It is being driven more strongly from within, which is good for Germany and the euro zone," said economist Holger Sandte at Nordea. "It is also positive that firms are investing more in equipment and are not so hesitant anymore."

The data also confirmed an earlier flash estimate showing Germany's gross domestic product (GDP) was up 0.9 percent on the year in the second quarter.

Domestic demand added 0.5 percentage points to GDP in the quarter and foreign trade 0.2 percentage points.

"Growth is broadly supported - two-thirds comes from domestic demand, a third from trade... This could be the start of a long upturn for investment. Low interest rates and returning confidence provide a sound basis for this," said Christian Schulz at Berenberg Bank.

MILD SLOWDOWN FOR SECOND HALF

The strong second-quarter growth data, released a month before a federal election, will be welcome news for Chancellor Angela Merkel as she seeks a third term in the vote on September 22.

Her government expects growth of 0.5 percent in 2013, but Finance Minister Wolfgang Schaeuble said this week the year's growth could end up being as high as 0.7 percent.

While Europe's economic powerhouse steamed ahead during the early years of the euro zone crisis, it slowed last year and even contracted in the fourth quarter as exports languished and investment was sluggish.

But investments picked up significantly between April and June, largely due to weather-related catch-up effects after an unusually long and cold winter, while net trade also made a positive contribution to growth.

The Economy Ministry and the Bundesbank have cautioned that growth will probably be more moderate in the second half given that bumper second-quarter growth was partly due to those catch-up effects and Germany still faces a tough international environment.

However the labor market is still robust, supporting future domestic spending.

"Up to now, soft indicators released for the third quarter have been promising, indicating that the expected slowdown of the economy in the second half of the year should be mild," said ING economist Carsten Brzeski.

"In fact, the current growth mix should continue in the remainder of the year: decent consumption on the back of the strong labor market accompanied by a gradual export recovery."

(Reporting by Alexandra Hudson and Stephen Brown; Editing by Noah Barkin/Jeremy Gaunt)

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