Flutter warns on earnings as sports matches suspended after virus outbreak
The company behind Paddy Power and Betfair has warned it faces an “unprecedented” challenge as sports matches and leagues are cancelled because of the Covid-19 outbreak.
Flutter Entertainment, which gets nearly 80% of its revenue from bets on sporting events, said its accounts will be seriously dented.
All Premier League football games have been postponed in England until the beginning of next month, while the major leagues in Spain, Italy, France and Germany have been indefinitely suspended.
Horse racing is continuing, although behind closed doors in places, but many major sports have been suspended in the US. The European football championships, Euro 2020, are also likely to be postponed, Flutter said.
“This will obviously have a material impact on the revenue and earnings of the group,” it said in a statement to shareholders on Monday.
Chief executive Peter Jackson said: “The challenge currently facing our business and the industry more widely is unprecedented in modern times.
“Our focus, first and foremost, is on protecting the welfare of our employees and our customers and we will leave nothing to chance in this regard.”
As it does not know when the regular sports schedule will start up again, and which other sports might decide to follow suit, Flutter said it is difficult to gauge the financial impact.
But if restrictions are still in place until the end of August, and Euro 2020 is cancelled, full-year ebitda (earnings before interest, tax, depreciation and amortisation) will take a £90 to £110 million hit.
If horse racing fixtures are cancelled as well, and its UK and Ireland betting shops are forced to close, this could cost the company another £30 million per month in ebitda.
Analysts at Jefferies had previously expected ebitda to reach £428 million in 2020.
Mr Jackson said: “While our near-term profitability will be impacted by the essential measures being taken globally, the board will remain focused on protecting shareholder value and managing the business through these turbulent times.”