William Hill Online issues profit warning
Operator says profits could fall by as much as ?25m and confirms it's in advanced discussions to invest in OpenBet
William Hill this morning warned the City profits from its digital arm could fall by as much as ?25m in 2016 due to regulatory factors and significantly lower gross win margins.
In a trading update the London-listed operator, which also confirmed it was in “advanced” discussions to invest in OpenBet, said it expected full-year Group profits to be between ?260m and ?280m, 12% lower than consensus according to Barclays.
The firm said the profit warning, which has seen shares slump by more than 13%, was the result of a two-fold problem within its Online business, while the broader William Hill Group continued to perform to expectations, despite a difficult Cheltenham Festival.
The operator blamed an acceleration in the number of time-outs and automatic self-exclusions since the start of the year, particularly in gaming, for a decline in digital revenues which were also impacted by lower gross win margins.
Online margins are currently 1.9 percentage points lower than expectations, due largely to adverse European football results and what the operator described as its worse Cheltenham Festival in many years.
“Today’s statement reflects the combined effect of our assessment of the impact of recent regulatory changes and unfavourable sporting results including the worst results at Cheltenham in our recent history,” James Henderson, William Hill CEO, said.
“We are also experiencing softer UK growth as a consequence of acquiring lower value customers.
“While the rest of the Group is performing in line with our expectations, we continue to focus on improving Online’s performance so that we can, once again, outperform the market,” he added.
The operator said interim managing director of William Hill Online Crispin Nieboer, who took over from Andrew Lee in January, had identified a number of strategic priorities to improve performance including maximising UK customer yields and growing its non-core market business.
Today’s profit warning comes just weeks after William Hill reported a 29% year-on-year fall in 2015 online profits following slower revenue growth than previous years and a ?66.4m hit from the UK’s Point of Consumption (PoC) Tax.
Meanwhile, William Hill also said today it was in “advanced discussions with a partner” to invest in sportsbook supplier OpenBet.
The announcement confirms previous press reports the operator was backing a bid, believed to involve NYX Gaming Group, for OpenBet which is understood to have a price tag of between ?250m and ?300m