Shares in Paddy Power Betfair edged slightly higher early on Wednesday (24 August 2016), even though the bookmaker posted first-half losses due to costs related to its merger with its sector peer Betfair.
In the six months to 30 June, the Ireland-based company posted a pre-tax loss of £49.3m, compared with a profit of £106.2m in the same period last year, on the back of £195m merger costs.
In February, Betfair and Paddy Power joined forces to create a group that is currently substantially larger than any of its rivals. The Irish bookmaker said it now expects cost synergies of £65m compared with an earlier estimate of £50m.
"Paddy Power Betfair has sustained good momentum through a period of considerable change," said chief executive Breon Corcoran.
"The restructuring is now largely complete and the merger synergies are being delivered ahead of schedule. We are creating a world-class operation by exploiting the unique assets and capabilities of each legacy business, particularly in the key functions of technology, marketing and trading."
Aside from the loss, however, the other metrics made better reading for the company, which posted revenue growth across of all its divisions.
Revenue rose 18% year-on-year to £759m, boosted by double-digit growth in all four of the company's divisions, which include online, retail, as well as the US and Australian market. Underlying operating profit, meanwhile, were up 39% from the corresponding period in the previous year to £148m.
"All in all its a solid report from the firm but one must remind that market expectations had been fairly high going into its report and further exemplified by the fact share prices are closing in on the psychologically important £100 level," said Joshua Raymond, analyst at XTB.com.
"Having rallied from £79 per share since the start of July, it will be interesting to see if shareholders begin to lock in their gains after a solid earnings report."
As with its rival William Hill, Paddy Power said its performances received a timely boost by a strong Euro 2016 performance, which partly offset a disappointing sportsbook revenues. Echoing other bookmakers, Paddy Power admitted it had suffered "adverse" conditions during the Cheltenham Festival in March.
Bookmakers described this year's festival as "the worst Cheltenham ever" as they nursed losses to the tune of a combined £60m, after a series of favourites stormed home to win their respective races.