William Hill share price plunges after profit warning of £25m drop in online business

 
Francesca Washtell
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Cheltenham Festival - Champion Day
William Hill suffered major losses at this year's Cheltenham Festival (Source: Getty)

Bookmaker William Hill's share price plunged over 13 per cent after it warned of a £25m fall in online profits in 2016.

The firm's online business took a hit in the period to 20 March as digital performance was hit by regulations and lower than expected gross win margins.

Share prices plunged on the news, dropping over 50 points and 13.5 percent to 320.50 shortly after trading began.

William Hill William Hill | mobile image

An acceleration in the number of time-outs and automatic self-exclusions since the start of the year has impacted the level of actives across the online business, particularly in gaming.

"While the trend is still evolving, we estimate that, should these trends persist around current levels, the consequent lower revenues will reduce Online's profits by £20-25m in 2016," William Hill said in a trading statement today.

Second, gross win margins in the online business are 1.9 percentage points below expectations in the period at 6.2 per cent, affected by European football results and by the company's worst Cheltenham results in recent history.

However, the firm continues to trade well and has benefited from favourable UK football results and the US had a strong Super Bowl result in February. Momentum is continuing to build in Australia following the changes made in 2015, with further growth in wagering, new accounts and actives.

A leadership changeover in January brought Crispin Nieboer on board as the interim managing director for its online business.

William Hill has also confirmed it is in "advanced discussions" with a partner that could see it invest in gambling software company OpenBet. The firm made an unsuccessful bid for 888 Holdings last year.

"Today’s statement reflects the combined effect of our assessment of the impact of recent regulatory changes and unfavourable sporting results including the worst results at Cheltenham in our recent history," chief executive of William Hill, James Henderson, said.

"We are also experiencing softer UK growth as a consequence of acquiring lower value customers. While the rest of the group is performing in line with our expectations, we continue to focus on improving online’s performance so that we can, once again, outperform the market."

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