William Hill profits plunge
British bookmaker William Hill has said it will remodel its retail business this year, after it warned full-year 2018 adjusted operating profit was expected to be about 15% lower than a year earlier.
The company had cut its profit forecast in November due to tightening regulations at home, particularly on lucrative fixed-odds betting terminals, and warned of more losses in the US.
Yesterday it said its US business had broadly broken even in the year.
European gambling companies have been looking to expand across the Atlantic in light of regulatory curbs in the UK and as US states ease curbs on betting.
William Hill said 2018 adjusted operating profit from continuing operations would be £234m (€265m), slightly higher than analyst estimates of £232.2m.
Profit was lower in its retail business due to tough conditions and the offering would be remodelled in 2019 as chief executive Philip Bowcock looks to make the firm a “digitally-led international business”, the company said. The company had said in November that it would look at new products to offer alternatives to fixed-odds betting terminals.
With rapid expansion underway in the US and the acquisition of Mr Green nearing completion, we look forward to making further progress this year,” Bowcock said.
William Hill has earmarked about £120m to £130m for 2019 to fund its US expansion.
Rival GVC Holdings which owns Ladbrokes expects the US to be profitable, despite a Department of Justice call for wider restrictions on all gambling on the internet.
Paddy Power-Betfair’s expansion into the US sports betting market may add up to €240m to its annual group earnings by 2023, Davy forecast late last year.
However, its US losses are set to continue until the end of next year.
William Hill shares have fallen 46% in the past 12 months.
They dropped over 2% yesterday, but analyst reaction was kinder.
“This update from William Hill is in line with expectations. While there is limited detail by division, the business appears to be performing as we expect,” said Goodbody’s Gavin Kelleher.
“The group faced headwinds in 2018 — its US investment, retail weakness and customer due diligence in online — and these become more significant in 2019.
“However, forecasts have been adjusted to reflect this. We do not expect to make any changes to our numbers,” he said.
