Sports results and tax hike hits Hills

Sports results and tax hike hits Hills

Friday, October 23, 2015 Totally Gaming
CEO James Henderson said profits would be at the lower end of analyst predictions

William Hill’s share price was down more than six per cent today (Friday) after the gambling operator issued a warning over its full-year profits.

In a trading update for the three months to September 29, the company said group net revenue fell nine per cent year-on-year and operating profit dropped 39 per cent.

William Hill said that results were “significantly impacted” by a swing from outstanding gross win margin in Q3 2014 to a less strong gross win margin in Q3 2015 and an additional £23m (€31.9m/$35.4m) in new or increased rate UK gambling duties.

Chief executive James Henderson said that the board now expects full-year operating profit to be “around the bottom” of the analyst consensus range of between £290.9m and £312.1m.

"Q3 was always going to be a tough quarter given last year's Fifa World Cup and very strong gross win margin, allied to £23m of additional gambling duties this year,” Henderson said.

William Hill said the quarter also featured weaker-than-expected sporting results impacting retail, the US and Australia – which was down 31 per cent - and the drag effect of the non-core market decline in online. Operating profit in the retail division fell 31 per cent, while online operating profit slid 37 per cent.

“The growth in online’s core markets - the UK, Italy and Spain - remains strong for both betting and gaming," Henderson said. “The non-core markets' weakness relates to factors including exchange rates, market closures and regulatory changes, which remain a feature of the evolving online market.”

Shore Capital, which rates the stock at 'hold', said: "Following on from Ladbrokes more positive update yesterday, the William Hill Q3 update is disappointing with the trends witnessed in Q2 continuing into the third quarter. We recently highlighted that the fall in the share price was leaving the group starting to look good value and still trades on c13x next year's numbers pre the likely fall in the share price. However, getting through the drag from non-core territories is likely key for a re-rating."


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