William Hill issues profit warning as bookie bemoans Cheltenham results
William Hill has warned over profits after its online trading was hit and the group suffered the "worst" Cheltenham results in recent history.
The FTSE 250 company said lower revenues would knock back online profits by between £20m and £25m for 2016, following a rise in the number of customers taking forced breaks from gambling.
The firm said it had been hit by an "acceleration" in the number of online customers taking "time outs", where they can lock themselves out of their accounts, and "automatic self-exclusions", which force gambling addicts to take a break.
It said Festival results - which saw wins for heavily-backed horses throughout the week, including Vroum Vroum Mag, Douvan and Annie Power on the opening day - coupled with poor results on European football also knocked its performance, with online gross win margins hitting 6.2% for the period to March 20 - 1.9% below expectations.
The company's share price also took a hammering, down more than 10%.
Chief executive James Henderson said: "The statement reflects the combined effect of our assessment of the impact of recent regulatory changes and unfavourable sporting results including the worst results at Cheltenham in our recent history.
"We are also experiencing softer UK growth as a consequence of acquiring lower value customers. While the rest of the group is performing in line with our expectations, we continue to focus on improving online's performance so that we can, once again, outperform the market."
However, the group said it had identified a number of key areas to shore up the business following the appointment of interim managing director Crispin Nieboer, including cutting costs.
It said the wider William Hill Group "continues to trade well" and is in line with the firm's expectations, thanks to "favourable" UK football results and strong performance for its US business following the Super Bowl result in February.
The group said its operating profit for 2016 is now expected to be between £260m and £280m.
It also confirmed that it is in advanced talks with a partner about a possible investment in gaming platform OpenBet.
The profit warning comes after the firm announced in February that pre-tax profits had fallen 21% to £187.4m in the 12 months to December 29, after new online and gaming machine levies set it back around £87m during the year.
Charles Huggins, investment analyst at Hargreaves Lansdown, said 2016 was supposed to have been the year when William Hill's online business "regained its mojo".
He added: "The challenge for William Hill is to reduce reliance on problem gamblers and recruit more "recreational" clients.
"These are punters who don't take it seriously enough to really know what they are playing at, and can therefore be relied upon to bet money at poor odds, in return for a bit of a thrill."