6th Nov 2018 09:01
LONDON (Alliance News) - Shares in William Hill PLC dropped on Tuesday as the bookmaker warned of a decline in annual profit as it reported revenue for the 17 weeks since June 27 was down 4% on a year before.
The stock sank 6.1% on the news, trading at 200.60 pence per share, the worst performer in the FTSE 250 index.
William Hill said it expects financial 2018 operating profit to come in between GBP225 million and GBP245 million. A year ago, adjusted operating profit was GBP291.3 million.
Furthermore, William Hill said it expects its profit to reduce by GBP20 million in 2018 and by a further GBP25 million in 2019, due to "adverse regulatory and tax changes" including the increase in Remote Gaming Duty to 21% that was announced in the UK government budget last week.
In financial 2017, adjusted pretax profit came in at GBP245.9 million while, on a statutory basis, William Hill reported a pretax loss of GBP74.6 million.
For the period from June 27 to October 23, William Hill's total revenue fell 4% from a year prior. Online revenue fell 5%, while Retail revenue dropped 4%.
However, total revenue was flat so far this year, with Online revenue up 4% and Retail down 4% in the year to date.
The betting company made "significant progress" in the US, with revenue so far this year up 29%, and up 6% in the 17 weeks to October 23.
Referring the US court decision to allow states to legalise sports betting, Chief Executive Officer Philip Bowcock said: "It has been another busy period for William Hill, with significant progress made on our plan to capitalise on the emerging US sports betting opportunity following the Supreme Court's decision to overturn PASPA in May.
"I'm pleased to report that we've built on our market leading position in Nevada to make rapid progress in other states as they legalise sports betting, and are the only company to be taking sports bets in the first five states to have regulated."
William Hill's goal for the US is to enter every state, the firm added. It hopes to grow US earnings before interest, taxes, depreciation and amortisation to USD300 million in 2023 from USD50 million in 2018.
In a separate announcement on Tuesday, William Hill unveiled a strategy which aims to "at least" double profits between 2018 and 2023 after building a "digitally led and internationally diverse gambling business".
The company will look to expand its online revenue, to reach GBP1 billion by 2023, by diversifying into growing international markets beyond the UK and the US. Accordingly, William Hill last week announced the acquisition of Swedish betting firm Mr Green & Co AB.
William Hill said: "Despite our confidence in the longer term opportunity, 2019 will be a transition year as good underlying growth will be offset by the increased Remote Gaming Duty and the full-year effect of regulatory headwinds.
"As a consequence Online profit is expected to be broadly flat on 2018 before we expect to see a return to double-digit growth thereafter."
Finally, the Retail business will face "substantial structural change across the licensed betting office sector over the coming years".
The company added it expects profitability to reduce by GBP70 to GBP100 million due to changes laid down by the Triennial Review.
In May, the UK Department for Digital, Culture, Media & Sport reduced the maximum stake on fixed-odds betting terminals from GBP100 to GBP2 in its review, hurting betting companies' profits.
Related Shares:
WMH.L