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William Hill beats profits forecasts after friendly sports results

Last updated: 09:29 13 Jan 2020 GMT, First published: 07:44 13 Jan 2020 GMT

William Hill PLC -

William Hill PLC (LON:WMH) said underlying profits for 2019 will be ahead of market expectations after a bunch of sports results went in its favour in December and with strong early growth at its US business.

The sports betting and gaming group said calendar year adjusted operating profit from continuing operations is expected to come in at between £143mln and £148mln, though this will be down at least 37% from the £233.6mln a year earlier but well ahead of the £130m average analysts forecast.

READ: William Hill says bookmaking trends improving following mass shop closure

UK betting shops generated more than the projected £50mln-£70mln operating profit thanks mainly to the favourable sports results, Hills said in a pre-close statement that was brought forward from Thursday.

While the sporting results also boosted online performance in the UK, which grew in line with the market for the final three quarters of the year, overseas was “mixed”.

Overseas online revenue is expected to be “broadly flat” on a pro forma basis in the fourth quarter as sportsbook was weak but Sweden-based Mr Green drove a good performance in gaming.

Breakeven is now also anticipated for the US business, which takes sports bets across 10 states and launched its online platform in September, where guidance had been for losses of up to $20mln.

CFO cashes in her chips

In a separate announcement, the FTSE 250-listed group said chief financial officer Ruth Prior is stepping down, with a 12-month notice period.

This comes three months after previous boss Philip Bowcock departed and the chief executive role was given to chief digital officer Ulrik Begntsson, who has since brought in a new chief technology and product officer, as well as introducing a new role of chief operating officer.

Shares in the company, having hit all-time lows below 140p last spring but rallied around 40% since, were up 1% to 186.38p on Monday morning.

The profit outturn was "quite a material beat", said broker Peel Hunt, but as it is a function of favourable sporting results the analysts were not changing their 2020 forecasts at this stage.

As well as observing that the retail betting shops had benefited from strong sporting margins and better than expected gaming performance, Peel Hunt also noted that reported retail profits will benefit from the leases on shops to be closed being treated as exceptional, while the revenue prior to closure being treated as normal.

Prior's resignation is "a material negative", the analysts said, while also saying the online business "has been turning around for so long it is hard to tell if it is turning around or bogged down".

"The largely new operational top management team may feel they have not been at it for long but clearly some investors have lost patience. Today's trading statement has the potential to pique a little more interest in a story where not only online, but also the US, have the potential to go materially right."

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