William Hill are looking to get 2017 out of the gate smoothly after a rocky 2016 whose effects are lingering.
This issue comes up with Monday’s caustic announcement to investors that the unaudited full year profit margin for 2016 operating profit is unlikely to surpass £260m, at the bottom of its previously forecasted range of £260m-280m.
This constitutes the third profit warning WH has issued in the past 12 months, with this new 2016 estimate representing a figure £30m less than the company took home in 2015.
Final figures are being tabulated and will be released February 2th, but what is already known is that those figures will reflect sports betting gross win margins “below expectations” due to “unfavorable football and horseracing results” in the month of December which failed to rescuscitate an unfortunate extension of a trend first identified by WH in a November 14 trading statement.
Righting The Ship
Despite the overall downturn, PH interim CEO Philip Bowcock insisted on hope for 2017 due to continuing positive growth in online wagering online as well as in the Australia market continuing which began in mid-2016.
The shortfalls have specific implications for senior management, who will not be collecting any performance bonuses as a result, so it looks as if William Hill is about to find out who its real friends are.
Questions About 2016
Reasons for the underwhelming performance are hard to pinpoint, but there is a sense of what could have been among analysts in the era of the merger as a result of WH’s largest shareholder Parvus Management cutting short considerations of a merger with Canada’s Amaya Group after talks between the two had begun.
The British gaming giant may have to find greener pastures elsewhere. One of those places might be in Pine Bluffs, Iowa, where the US division of Hill announced a partnership with casino operator Caesars Entertainment on a new pari-mutuel racebook at the Horseshoe Council Bluffs Casino set to launch at the time of this year’s Kentucky Derby.
Tasks At Hand
The short term problem for William Hill is to come back strong from last month’s results, in which punters are said to have had a remarkably good string of luck, prompting William Hill to respond with the following statement:
"The recent run of sporting results have not changed our confidence in a better performance in 2017.”
Another challenge is putting in a new senior management team after the 2016 sacking of chief executive James Henderson two years into the job.
Establishing new permanent senior management and finding a productive merger agreement would at this point contribute to perceptions of greater stability, competitiveness and continuity. In a still new business era for iGaming, let’s see what happens in 2017 at one of punting’s very strongest brands before rushing to judgement about a tough close to an educational 2016.