UK Bookmaker William Hill Issues Gloomy Profit Forecast After Taking $25 Million Hit in December
Posted on: January 9, 2017, 01:33h.
Last updated on: January 9, 2017, 01:44h.
William Hill’s 2016 profits came in £20 million ($25 million) lower than expected, thanks to a late run of unfavorable sporting results. Unfavorable to the bookmaker, that is. Customers scored and scored big, dwindling the company’s profits substantially.
A string of customer-friendly outcomes in the UK in December forced a profit warning this week, adding to the company’s woes and capping off a testing year for the bookmaking giant.
William Hill cited Boxing Day (December 26) soccer outcomes, which it said were the worst on record, with 18 of the top 20 most-backed teams winning their games. The bookmaker said it lost £2.5 million ($3 million) alone on the game between Chelsea and against Bournemouth, won convincingly by the favorites, Chelsea, at 3-0.
Meanwhile, Chelsea’s 13-match winning streak and an 18-match run for Scottish champions Celtic bolstered accumulator wins.
Horseracing over the holiday period also contributed to the bookmaker’s malaise, with many of the favorites romping home, such as Thistlecrack at the King George VI Chase and, two days later, Native River at the Welsh Grand National.
Unexpected Killer Victories
Big hits for bookmakers earlier in the year, like Leicester’s 5,000-1 Premier League win, plus one of the worst Cheltenham meetings on record, had been handsomely offset by the European Championship soccer tournament in the summer. By November, William Hill said it expected to come in somewhere at the top end of its profit guidance.
But then December happened, and it was brutal.
“Importantly, the improvements we saw in wagering online and Australia in the second half have continued in recent weeks,” said interim Chief Executive Philip Bowcock. “All four divisions saw customer-friendly results at the back end of the year, which translated into profits being around £20 million below our prior expectations.
“With key underlying trends continuing to be positive, the recent run of sporting results have not changed our confidence in a better performance in 2017,” he added.
A Year to Forget
In 2016, it was the year that William Hill saw its status as Britain’s biggest retail bookmaker toppled by the merger of Ladbrokes and Gala Coral. Meanwhile, it ousted CEO James Henderson, reportedly for his failure to improve the firm’s digital arm. Six months later, Hill has failed to yet find a permanent successor.
Meanwhile, its own merger attempt with Amaya was wrecked by a shareholder revolt, and the bookmaker was forced to fend off an unwanted acquisition attempt from 888 Holdings and the Rank Group.
Nicholas Hyett, equity analyst at Hargreaves Lansdown, told the London Evening Standard that despite the upbeat message from its interim CEO, William Hill’s problems go beyond a mere short-term losing streak.
“We can forgive a run of poor sporting results,” he said. “The bigger problem is that although performance in online is improving, it’s doing so at a snail’s pace.”
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