Flutter shares tumble as earnings guidance cut

Flutter Entertainment shares slumped after the gambling operator warned annual non-US profits are set to come in at the bottom end of forecasts.

Shares in the Paddy Power owner slumped 8.8 per cent to £124.90 after the group said adjusted earnings before nasties for its business outside the US was predicted to be around £1.44billion for 2023, having previously guided for as much as £1.6billion.

The FTSE 100 company revealed earnings had taken a £30million hit from adverse foreign exchange movements and a £50million impact from ‘customer-friendly sports results’ in September and October.

The result chimes with that of rival Entain, with the Ladbrokes owner last week reporting a £45million hit from punter-friendly football results in its third quarter. 

Expectations: Paddy Power owner Flutter Entertainment warned that its annual non-US earnings were set to be be at the bottom of its previously guided range

Further impact came from challenging conditions in the Australian horse racing market, which the group anticipates continuing into next year.

As a result, Flutter’s revenue in Australia fell by 7 per cent at constant currency levels to £262million for the three months ending September.

But its overall turnover still increased by 13 per cent to £2.04billion following bumper trade across the US and UK.

Revenues in the former territory benefited from a record volume of new players betting on NFL games and FanDuel expanding faster than any other brand in the gaming sector.

Meanwhile, Flutter’s trade in the UK and Ireland, where it runs Betfair and Sky Betting & Gaming, was buoyed by healthy interest in the new Premier League season.

‘Even in this seasonally quieter period, the power of our diversified business is clear,’ said Peter Jackson, chief executive of Flutter.

The Dublin-based company further announced plans to have a secondary listing on the New York Stock Exchange in the first quarter of 2024, upon which it would delist from Ireland’s Euronext Dublin.

An increasing number of companies are pursuing or considering listings on Wall Street in the hopes of gaining higher valuations and better access to liquidity.

Building materials supplier CRH Holdings, drugmaker Okyo Pharma, and plumbing group Ferguson are among the groups to have recently moved their primary listing from London to New York.

And just last month, semiconductor firm ARM Holdings had the largest initial public offering in the US for two years, having snubbed a London listing despite heavy lobbying from the UK Government.

Jackson said Flutter’s stateside switch ‘will bring the group significant benefits from accessing the world’s deepest and most liquid capital markets’.

He added: ‘Overall, the significant potential for US growth and ability to leverage scale benefits across our diversified portfolio outside of the US underpins our confidence in our significant and sustainable long-term earnings growth potential.’

Sports betting in America has grown considerably in popularity ever since the US Supreme Court declared a federal law that virtually banned the activity nationwide unconstitutional five years ago.

Russ Mould, investment director at AJ Bell, remarked: ‘The US has been the big opportunity for Flutter for some time, and remains so, but today’s warning is a reminder that this is a bigger beast and if everything is not working in its favour, the consequences can be dire for investors.’

This post first appeared on Dailymail.co.uk