William Hill profits hit by £20m festive pay out
Operator says last month’s “customer-friendly” results will see lower than expected full-year profits of c£260m
William Hill today issued its third profit warning in the space of a year, attributing a string of “customer-friendly” results for full-year group profits coming in £20m lower than expectations.
In a trading update this morning, the London-listed operator said operating profit for the unaudited 52 weeks ended 27 December 2016 was expected to be c£260m.
The company, which in November guided towards the upper end of £260m-£280m, claimed gross win margins were hit by unfavourable football and horseracing results in December.
Philip Bowcock, the operator’s interim CEO, said: “Importantly, the improvements we saw in wagering in Online and Australia in the second half have continued in recent weeks.
“However, all four divisions saw customer-friendly results at the back end of the year, which translated into profits being c£20m below our prior expectations.
“With key underlying trends continuing to be positive, the recent run of sporting results have not changed our confidence in a better performance in 2017.”
The UK bookmaking industry endured a torrid time during the Christmas period, including 14 of the 15 most popular teams all winning on Boxing Day and additional unfavourable results on New Year’s Eve. The results on 31 December haven’t been factored into today’s Hills’ report.
Richard Stuber, an analyst at Numis, said: “Whilst a profit warning on the back of a gross margin miss should not be overstated, this is the 3rd warning in 12 months and focuses us once again on William Hill’s near term shortcomings, including UK retail exposure, losing market share online and the lack of a permanent CEO.”
However, Stuber said it would not be altering its 2017 consensus of £279m for William Hill as the failure to hit the upper end of its profit guidance was “entirely gross win margin related”.
Today’s trading update follows a turbulent year for William Hill, which included the operator’s online business issuing a profit warning in March following an acceleration in time-outs and automatic self-exclusions.
The company’s chief exec, James Henderson, was sacked four months later. He had served as CEO for two years and worked at William Hill for more than 30 years.
William Hill’s share price was down 3.22% to 288.10p on the London Stock Exchange at the time of writing.
The operator – which did not reveal any figures for its online business – will report its final results for 2016 on 24 February.