3rd Oct 2013 14:42
LONDON (Alliance News) - Betting company William Hill PLC Thursday warned that operating profit was GBP20 million below its expectations in its third quarter and it may not make up the shortfall before the end of the year, after results, particularly football scores, went against it.
In a statement that echoed that of rival Ladbrokes PLC last week, William Hill said gross margin wins were down on the year both online and in its betting shops. It said footfall in its shops was down in July, although football betting in the shops picked up again August and September.
However, in contrast to Ladbrokes, William Hill said its online and mobile operation were surging, with mobile gaming net revenue up 126% in the 13 weeks ended October 1, accounting for 13% of gaming net revenue.
Still that wasn't enough to offset the lower betting results
"While the fundamental performance of the group remains good and there is time for the Group's shortfall versus internal expectation to be recouped should results turn in our favour, there can be no certainty that we will make up this shortfall before the end of the year," Chief Executive Ralph Topping said in a statement.
Asset Manager Investec reiterated its Buy recommendation on the stock, even though it cut its full-year expectations for earnings before interest and taxes to GBP330 million and its pretax profit forecast to GBP282 million after the operating profit shortfall.
Investec said that based on the assumption that William Hill's retail operations continue to rebound as it benefits from the roll-out of new eclipse gaming machines, its Australian operations continue to develop and sports margins return to a normal level, it will keep its full year expectations for 2014 unchanged, with a pretax profit forecast of GBP338 million.
Jefferies also reiterated a buy rating, welcoming William Hill's increased focus on the football market, which is a positive for its long-term health as football punters tend to recycle their winnings, the bank said.
William Hill reported a 27% rise in retail football stakes 27% during the third quarter, while online football wagering increased 49% and mobile wagering by 115%.
It reported a third quarter revenue increase of 10%, but said its operating profit was down 31% against the the same period a year earlier. Online net revenue fell 2%, and retail revenue grew 5% during the quarter, but its operating profit for each sector fell 28% and 27%, respectively.
The betting company said it had invested further in Australia, buying online betting site tomwaterhouse.com for GBP20 million and strengthening its management team in the region.
William Hill shares have remained lower for most of the day, trading at 409.40 pence per share Thursday afternoon, down 0.4%.
By Rowena Harris-Doughty and Anthony Tshibangu; [email protected]; [email protected]; @rharrisdoughty; @AnthonyAllNews
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