William Hill fell to a staggering loss of £722m last year, it confirmed today, as the bookmaker recommitted to meeting guidance for 2019.
The gambling firm swung to a loss of £721.9m in 2018, down from 2017’s profit before tax of £146.5m.
Revenue rose two per cent year on year, though, to £1.62bn, while adjusted operating profit from existing operations fell three per cent to £266.8m.
Cashflow fell 28 per cent to £197.1m thanks to the profit drop, but William Hill also cut its net debt down from £515.2m in 2017 to £308.1m last year.
Basic earnings per share fell to minus 83.6p while the firm hacked its dividend back by nine per cent to 12p per share.
Shares were flat on the news this morning at 187.5p.
Why it’s interesting
After a previous warning of the hit to profits, William Hill blamed a £883m non-cash impairment charge for the loss.
It took the charge due to the impending cut in the maximum stake on fixed odds betting terminals, which will fall from £100 to £2 next month.
High street trading was down two per cent so far in what William Hill described as a “resilient” performance, despite plans to axe up to 900 betting shops as a result.
Calling 2018 a “pivotal” year, William Hill hopes its bet on a US expansion will pay off in 2019, with its busines live in six states and access secured to 17 in total, giving it a 34 per cent market stake so far.
Most US states legalised sports betting last year, prompting an influx of interest from British gambling firms.
William Hill also plans to expand its online offering in 2019, saying operating profit was up 11 per cent before the £17m hit of stronger laws around customer due diligence online.
The firm also bought digital betting specialist Mr Green for around £242m to further diversify its income.
Emma-Lou Montgomery, associate director from Fidelity Personal Investing’s share dealing service, said William Hill looks set to recover from a bad hand it was dealt in 2018.
“The gambling group now knows what it’s up against and has clear plans to turn this into a winner and double operating profits by 2023,” she said.
“The US looks to be key for the group, where it has a clear lead. While in the UK time will tell how the fixed odds betting cap affects business. But Q2 is expected to be tough and the future of some 900 shops will hang in the balance until the full extent of the impact is known.”
Read more: William Hill predicts lower profit for 2018
What William Hill said
Chief executive Philip Bowcock said 2018 was a “busy and decisive” year for the company.
“Key regulatory decisions in the UK and US gave us much needed clarity to set a new five-year strategy and a goal to double profits by 2023,” Bowcock said.
“We have three businesses at different stages, with online growing in the UK and diversifying internationally, Retail being remodelled in response to the new £2 stake limit, and rapid expansion in the US sports betting market.
“Against this backdrop, we delivered a good underlying performance in online, strong growth in the US existing business and a resilient retail outturn in the face of difficult high street conditions.
“We know the next few years will require careful navigating and investment, but with a clear strategy and diverse, experienced leadership teams in place we are ready to capitalise on the opportunities available to us.”