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William Hill looks to football, horseracing to ride out crisis
15th May, 06:49(Reuters) - William Hill said on Friday it is counting on the return of Germany's Bundesliga and horseracing in the UK to turn the odds in its favour, and that it expects a lower hit to core earnings from coronavirus-led disruptions which have cancelled sports events and shut its betting shops.
The British bookmaker expects each additional month of shop closures to impact core earnings by up to 15 million pounds, about half of its initial estimate, assuming the continuation of government support for furloughed workers.
The company also said its creditors had waived revolving credit facility covenants for 2020 and that it had reduced its cash burn to around 15 million pounds ($18.31 million) per month by cutting marketing spending, cancelling salary hikes and furloughing employees.
Shares in the company were up 9.4% at 116.8 pence by 0835 GMT.
William Hill suspended its dividend earlier this year and warned of an impact of 100-110 million pounds on core earnings if its high street shops had to close for a month and most sports events remained suspended until August.
On Friday, it said it was performing ahead of this initial scenario which now incorporates three months of shop closures.
"It is also becoming clear that the situation has not been anywhere near as bad as first feared with the government furlough helping, while the restarting of sporting events in the coming months could also offer some respite," CMC Markets analyst Michael Hewson said.
The gambling firm said it was encouraged by the return of Bundesliga, which is due to recommence this weekend, and horseracing, which has resumed in France and is expected to return to the UK in June.
Football accounts for about half of online UK sports betting, while horseracing contributes nearly a third of it.
Jefferies analysts said they expect trading to normalise in fiscal year 2021 and called the statement "reassuring" on several fronts.
William Hill pulled all future forecasts and said total net revenue plunged 57% in the weeks following the start of coronavirus lockdowns in Europe and North America.
Europe's bookmakers were already under pressure before the coronavirus outbreak from rising taxes and a crackdown in Britain which included limits on the size of stakes on gaming machines in betting shops. Bookmakers have, however, seen opportunities in the opening up of U.S. markets in the past year.