William Hill suspends dividend as sports cancellations hit betting firms
William Hill today said it has suspended its dividend due to widespread sports cancellations, sending its shares crashing more than 35 per cent.
The betting giant warned the postponement of key sporting fixtures would reduce its earnings by up to £110m.
The company, which makes more than half its revenue from its sports book business, said this could grow to a £35m hit if its UK shops were closed for several months.
Football matches in the Premier League and Champions League, Six Nations rugby fixtures and the US Masters golf tournament are among the sporting events that have been shelved as a result of the virus outbreak.
The moves sent shockwaves through the betting sector today, with some of the UK’s biggest bookmakers suffering a torrid day of trading.
Shares in GVC, which owns Ladbrokes Coral, dropped almost 21 per cent after it said earnings would be reduced by as much as £150m.
Meanwhile Betfair and Paddy Power owner Flutter slumped 13 per cent after it warned of a profit impact of as much as £100m.
Shares in rival 888 Holdings, which is yet to release a statement on the impact of coronavirus, dropped 12.5 per cent.
The move is likely to have a huge impact on Flutter, which made roughly 78 per cent of its revenue last year through bets placed on global sporting events.
The FTSE 100 betting group’s estimate assumes that the company’s UK and Irish shops remained open and that Irish and Australian horse racing fixtures continue to run, albeit behind closed doors.
If racing were cancelled and shops closed, Flutter said it expected earnings to be reduced by an additional £30m per month.
In a similar statement issued this afternoon, GVC forecast additional costs of up to £50m per month if UK shops were closed, including employment costs of roughly £20m.
“The challenge currently facing our business and the industry more widely is unprecedented in modern times,” said Flutter chief executive Peter Jackson.
“Our focus, first and foremost, is on protecting the welfare of our employees and our customers and we will leave nothing to chance in this regard. While our near-term profitability will be impacted by the essential measures being taken globally, the board will remain focused on protecting shareholder value and managing the business through these turbulent times.”
GVC boss Kenneth Alexander said: “While we do not underestimate the challenge presented by Covid-19, GVC is in a robust position to manage the impact on our operations.
“We are a diverse global business, with an experienced and expert management team, which operates across multiple products and markets.”
Both companies said they had a strong balance sheet and would continue to explore ways to mitigate the impact of the virus.