William Hill owner warns on profits following ‘customer friendly’ sports results

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William Hill owner 888 has issued a profit warning, blaming the impact of compliance and regulatory changes and “customer-friendly” sporting results for cutting into profits.

Gambling group 888 said it now expects third-quarter revenue to fall 10% year-on-year to around £400 million, adding that fourth-quarter revenue will be “sequentially higher” than the third quarter but “down by half year-on-year”. -Digits”.

Lord Jonathan Mendelsohn, 888’s executive chairman, said the result of the lower revenue was that full-year earnings before interest, tax, depreciation and amortization would be “lower than our previous expectations”. The group added that it now expects Ebitda margins to be between 18% and 19%, down from its previous forecast of more than 20%.

888 cited compliance changes in some markets, “customer-friendly” sporting results throughout September and the “ongoing impact of the safer gambling changes in the UK” announced by the government earlier this year as leading to lower revenue. The UK is 888’s largest market, accounting for about two-thirds of the group’s revenue.

The profit warning follows a trading update issued by Ladbrokes owner Entain earlier this week, which pointed to similar reasons for a “significant single-digit” year-on-year revenue decline. Shares in 888 fell more than 16% to around 92 pence in early London trading on Thursday.

888’s revenue slowdown will present another challenge for incoming CEO Per Widerström, who must stabilize the company after a series of management changes and compliance failures. William Hill also faces huge debt problems after 888 spent 1.95 billion pounds to acquire William Hill’s non-U.S. operations from Caesars last year.

In July this year, the UK Gambling Commission launched a review of 888’s license amid concerns over backers of the FS Gaming Investment Consortium and its links to the UK tax authorities’ bribery investigation. FS Gaming Investment Consortium holds a 7% stake in the gaming operator.

Mendelsohn, who has been serving as interim chief executive, said he was “extremely confident” that Widerström and newly appointed financial director Sean Wilkins “will lead the company into its next phase of growth”.

Goodbody leisure analyst David Brohan called the trading update “disappointing” and said he now expects to cut 888’s full-year EBITDA forecast by 9% to £320m. This year “is always going to be a challenging year for the group; however, earnings recovery potential remains strong,” he added in an analyst note.

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