Economy

Betting on a William Hill stock price recovery?

Betting on a William Hill stock price recovery?”

In an announcement on Friday, William Hill (LON: WMH) pulled its financial guidance citing the rising Coronavirus uncertainty.

The FTSE 250-listed group said its actions to mitigate the effects of coronavirus on the business means it is performing ahead of the initial scenario of £100mln-£110mln underlying losses, which included most sports remaining cancelled until the autumn.

William Hill, the betting and gaming company, reported that net revenue declined 57% on year in the "Coronavirus-impacted" period from March 11 to April 28.

Football accounts for about half of online United Kingdom sports betting, while horseracing contributes almost a third of it. Sports wagers were down 70% and gaming revenue was down 33%.

"We are planning for a staged opening of the United Kingdom retail estate in the second half of 2020 and we are carefully monitoring developments across the U.S. in the nine states where we have retail activities", the company said on Friday.

William Hill CEO Ulrik Bengtsson has explained: "William Hill has overcome many challenges in its 86-year history, and I am exceptionally proud of the team and their response to the COVID-19 pandemic". We have worked hard to protect them, and in turn they have done the same for our customers.

More news: Chinese envoy says U.S. undermining global economy, virus fight

He added that the group took measures to minimize costs, such as renegotiating with suppliers, cancelling executive bonuses and pay rises, and suspending its dividend to shareholders.

William Hill has said it expects to miss out on core earnings of up to £15m (€16.8m/$18.2m) for each month its shops are closed - though this is half the company's initial estimate.

Retail betting locations in the United States and United Kingdom remain shut for the most part. "We are taking care of our teams, securing as many employment opportunities as possible and we are ready to power up the business as soon as Covid-19 restrictions permit".

Bengtsson also said that, thanks to the net debt covenant, William Hill has sufficient strength in its balance sheet. "We are developing products that we are proud of and that will improve William Hill's competitiveness for the long term".

"A key plank of our valuation is the USA business where the process of opening more states to sports betting continues, and it appears that Eldorado, William Hill's U.S. partner, will continue with its acquisition of Caesars, which should give William Hill access to more states and casinos in the future", the analysts said.



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