William Hill Disappointing Profits

(Bloomberg) -- William Hill Plc, the U.K.'s second- biggest bookmaker, dropped the most since October after the company said full-year betting-shop profit would be lower than analysts predicted.

William Hill declined as much as 11.7 percent, to 164.5 pence, and was down 7.8 percent to 171.8 pence at 11:28 a.m. in London. Ladbrokes Plc, a competitor which reports earnings Thursday, was down 14 pence, or 7.8 percent, to 165.6 pence.

William Hill's first-half profit decreased 26 percent as it was hurt by horse-race cancellations and results that went in customers' favor. The London-based company said its online operations, which are being moved to Gibraltar to cut costs, would probably meet analysts' estimates.

First-half net income fell to 58.7 million pounds ($99.4 million), or 9.9 pence per share, from 79.7 million pounds, or 16.1 pence per share, a year earlier, William Hill said in a Regulatory News Service statement today.

"We are cognizant of rising unemployment and constraints on consumer spending generally," Chief Executive Officer Ralph Topping told reporters today in a conference call, adding, "the flat-racing product is not drawing the crowds like it used to."

Retail net revenue dropped 1 percent to 393.2 million pounds in the first half. Online revenue rose 58 percent to 100.1 million pounds, William Hill said in the statement. Horse- race cancellations in January and February and unfavorable results in March hurt profit, the company said.

In May, William Hill lost money on soccer as the four top Premier League teams, Arsenal, Chelsea, Liverpool and Manchester United, won or tied all their games, benefiting customers, the company said.

Telephone net revenue was down 18 percent to 18.6 million pounds in the half.

William Hill will pay a first-half dividend of 2.5 pence per share, compared with 7.75 pence per share in the year- earlier period. The company didn't pay a final 2008 dividend, to save cash.

Numis Securities analysts Wyn Ellis and Douglas Jack today lowered their recommendations to "add" from "buy," citing the change in outlook.