Hills issues third profit warning in 12 months after dodgy December


william-hill-profit-warningUK bookmakers William Hill are catching hell for blaming their 2016 operating profit shortfall on punters getting lucky.

On Monday, Hills informed investors that its unaudited full year 2016 operating profit would likely come in around £260m, at the bottom end of its previously forecasted range of £260m-280m. The profit warning was the third Hills has issued in the past 12 months and the 2016 estimate is over £30m less than the company took home in 2015.

Final figures won’t be released until February 24, but Hills said its sports betting gross win margins were “below expectations” due to “unfavorable football and horseracing results” in the month of December. Hills noted that this was a continuation of a trend it had already flagged in its November 14 trading statement.

Hills’ interim CEO Philip Bowcock said the punter-friendly results had shaved £20m off its 2016 forecast. However, Bowcock stressed that “the improvements we saw in wagering in Online and Australia in the second half have continued in recent weeks.” With “key underlying trends continuing to be positive,” Bowock insisted that the punter-friendly December results “have not changed our confidence in a better performance in 2017.”

Hills’ underwhelming 2016 performance means senior management won’t be collecting any performance bonuses, but Investec analysts suggested this radical approach of tying compensation to performance would only lead to more top execs fleeing the sinking ship in search of other publicly traded firms that take a more casual approach to doling out investor cash.

Hills’ shares closed out Monday’s trading down 2% to 291.8p. Hills’ investors may have shown restraint in response to Monday’s announcement, but SpringOwl Asset Management’s Jason Ader used his Twitter account to call Hills “one of the worst performing companies in the world” and Hills’ board and executive ranks “a case study in poor leadership.”

Ader, who last October suggested Hills would do well to consider a union with Canada’s Amaya Gaming, the parent company of PokerStars, also slammed Hills’ largest shareholder Parvus Management for scuttling the Hills-Amaya talks. Ader claimed the UK-based Parvus had “really destroyed the future of [Hills] by blocking its planned Amaya merger.”

Stateside, Hills’ US division just announced a partnership with casino operator Caesars Entertainment to launch a new pari-mutuel racebook at the Horseshoe Council Bluffs Casino in Iowa.

The deal calls for the construction of a simulcast wagering area adjacent to the Council Bluffs’ main casino floor that will simulcast thoroughbred, harness and greyhound races from tracks across the US seven days a week. Pending regulatory approval, the new racebook will open prior to this year’s Kentucky Derby.