Flutter, the owner of Paddy Power and Betfair, has cut its full-year guidance after reporting a quarterly net loss of more than one billion US dollars, weeks after announcing plans to eliminate 1,400 jobs in the UK and Ireland.
The New York-listed gambling group posted net losses widening to 1.15 billion dollars (£840 million) for the three months to the end of September, up from losses of 789 million dollars (£581.5 million) a year earlier.
The company attributed the result to higher taxes in the UK, punter-friendly football results and Brazil’s betting ban.
International arm hit by tax rise
Flutter said its international division, which includes the UK, saw underlying earnings fall 14% to 435 million dollars (£320.4 million) in the third quarter, with profit margins squeezed by the Government’s increase of remote gaming taxes from 21% to 40% in last year’s autumn budget.
Following the third-quarter performance, Flutter reduced its annual outlook, now expecting underlying earnings to drop by 12% to 2.5 billion dollars (£1.82 billion) and sales to rise by 7% to 17.61 billion dollars (£12.84 billion).
This represented a cut from previous guidance of 160 million dollars (£118 million) and 300 million dollars (£220 million) respectively.
Job cuts and restructuring
“Full year guidance is updated to include the impact of sports results and the previously disclosed impact of the Brazil closure, partially offset by mitigating cost actions,” Flutter said.
Last month, the company said it would cut around 1,400 jobs in the UK and Ireland, representing 15% of its 9,000-strong workforce in the division, as part of a major restructuring following increases in UK gambling taxes.
The proposed job cuts will affect workers in Leeds and Dublin, as well as UK and Ireland staff based at Flutter hubs in Porto, Portugal, and Cluj-Napoca, Romania.
The restructuring followed the increase in remote gaming duty, the tax on online casino games and slots, but came before the Government’s move in the October 31 budget to raise machine games duty from 20% to 25% from April next year.
Dan Taylor, who became Flutter’s chief executive at the start of October, said: “Looking ahead, our priorities are clear: build on our US leadership, capture the prediction markets opportunity, unlock more value from our international portfolio and simplify the way we operate.
“Delivering against those priorities will require faster execution, tough decisions and disciplined investment.
“I am confident our actions will make Flutter a stronger business in the long term.”
