Bookmaker William Hill issues profit warning after Cheltenham
In a surprise trading update on Wednesday, the bookmaker said it expected operating profit for this year to fall to between £260m and £280m, from £291m last year.
This is due to poor results at Cheltenham coupled with high value online customers restricting their betting.
William Hill shares fell more than 13 percent to 322p in early trading as investors digested the profit warning. Shares in other bookmakers also fell with investors lacking confidence in the industry as a whole. Ladbrokes was down more than five percent and Paddy Power Betfair dipping by just over two percent.
Unfavourable football results and the worst Cheltenham in history means that online revenues were down £15 million.
James Henderson, William Hill’s Chief Executive, apologised to analysts for publishing a trading statement so soon after the company’s results on 26 February.
He said: “Events have moved at a pace and we have seen two issues come together in accelerated fashion and I felt it was appropriate to provide an update. I can’t remember having four loss-making days at Cheltenham in my career.”
Customer ‘time outs’ are also affecting profits at William Hill. These self-imposed restrictions on gambling affect around 3,000 accounts each week, causing a loss of around £2 million for the bookmaker since the start of the year.
The changes in customer behaviour will cut online revenues by £20-25m this year, William Hill said. Henderson said the trend was across the industry but William Hill was affected heavily because it is the UK’s biggest online operator with higher spending customers.