William Hill hit for £20m by bad sporting run

William Hill hit for £20m by bad sporting run

Monday, January 9, 2017 Posted by Andy McCarron
Full-year results will be at low end of expectations

William Hill confirmed industry chatter that the bookmakers had endured a tough December when it said that operating profits for the year would be at the lower end of expectations due to punter-friendly football results over the Christmas period.

In a terse statement to the stock exchange this morning, the company said it had suffered a circa £20m shortfall in profits in the final weeks of the year to 27 December meaning that operating profits for the year would be at the low end of the projected figure of £260m to £280m.

Interim chief executive Phillip Bowcock said that despite the poor sporting results, underlying trends remained positive. “Importantly, the improvements we saw in wagering in online and Australia in the second half have continued in recent weeks,” he said.

William Hill said in November that wagers in online in the year-to-date were up 6% while Australian wagering was up 14%.

Analysts were less than impressed with the implications from the trading update. Simon French at Cenkos labelled the figures “disappointing” despite the well-flagged sports results travails.

Simon Davies at Canaccord Genuity was blunter. Giving his morning note to clients the title ‘Christmas Stuffing’, he pointed out that this was the third profit warning from the company in the space of the past 12 months.

The past year has been a “year to forget” for William Hill but Davies suggested that there are significant dangers ahead for both the company and the wider sector. “The New Year comes with its own sizeable black swan, in the form of the Department of Culture, Media and Sport (DCMS) report into Machines stakes/prizes. The outcome will not be clear probably until late March.”

Richard Stuber at Numis suggested the fact that though the margin miss was entirely unpredictable, the poor results should still focus attention on the company’s “shortcomings” including its retail exposure, its falling online market share and the lack of a permanent chief executive.

Ladbrokes Coral and Paddy Power Betfair will be reporting their period-close updates later in January which will give analysts and market-watchers a clearer picture of where the sector stands as it heads into another crucial year.

Totally Gaming says: The black swan analogy doesn’t quite ring true – the permutations from the DCMS review are entirely predictable, albeit likely to be unpalatable for the bookmakers. What cannot be helped is sporting results and as Stuber at Numis reports, Sky Bet has said that December was the “worst month in living memory” for the bookies. The sporting results are thought to have been better for the bookies in January, but it won’t be enough to mask that 2016 will have been a bad year for William Hill. Eyes now turn to what it can do to reverse its fortunes.


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