Paddy Power owner Flutter pauses share buy-backs to focus on cutting costs and debt

Online gaming giant Flutter will pause its share buyback programme to ​prioritise organic investment, deleveraging and cost savings, its new chief executive said on Wednesday, after the company reduced its profit forecast for a fifth successive quarter.

Flutter, the world’s largest online gaming company, has been forced to lower its profit expectations ​as higher regulatory costs, increased competition and strategy missteps slowed previously booming US growth.

Dan Taylor, who took charge in October, ⁠said his four immediate priorities would be to build on the company’s US leadership position, capture ‌opportunities ‌in ​the nascent prediction market sector, increase value from its non-US portfolio and simplify the company’s operating model.

Flutter shares were 1.9 per cent lower in premarket ⁠trading in New York.

“Delivering against those priorities ​will require faster execution, tough decisions and disciplined ​investment,” Taylor said in a statement.

He told Reuters he was confident of deleveraging ‌the company’s balance sheet over the next ​12 to 18 months towards its target leverage range of 2 to 2.5 times earnings.

The ⁠company’s leverage ratio has risen to ⁠4.6 times earnings from ​2.2 eighteen months ago, before acquisitions in the US, Italy and Brazil.

Flutter, whose brands include FanDuel and Paddy Power, also has a plan announced in August to save $500 million (€439.45 million) by 2029.

Just over two years ago, when Flutter promised up to $5 billion to shareholders, it had expected the US betting boom to more than double its core profit to $5 billion by 2027.

By the end of June, the buyback had returned $1.37 ‌billion to shareholders.

Flutter is now ⁠forecasting a 7 per cent fall in full-year core profit to $2.5 billion from the $2.66 billion flagged in August and $2.59 billion expected by analysts. The latest cut was due to ‌adverse sports results and a sports betting ban in Brazil.

A 25 per cent fall in third-quarter core earnings before interest, tax, ​depreciation and amortisation to $360 million compared to the $399 million average of ​analysts polled by LSEG SmartEstimate. Taylor said, however, that the underlying performance in the US was ahead of expectations. – Reuters

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