he gambling and betting company said in a trading update on Thursday it expected earnings before interest, tax (EBIT) and exceptional items to be around us$ 560 million pounds in the year to January 1.
According to the average of 20 analyst forecasts given to Reuters Estimates, William Hill was expected to report EBIT of around us$ 573 million for the year, little changed from 292.2 million the previous year.
Analysts at Cazenove said that it expected to downgrade its 2007 forecasts by 4 percent and by 7 percent for 2008 following the trading update. Cazenove, which has an "underperform" rating on the stock, had expected William Hill to report EBIT of around us$ 584 million in 2007.
Shares in William Hill, which have underperformed the travel and leisure sector by more than 7 percent in the past year, were 1.9 percent lower at us$ 0.83 by 8:15 a.m., valuing the company at around us$ 3 billion.
Analysts at Morgan Stanley, however, said that it was a "solid" trading update and reiterated its "overweight" trading us$ 1.23 price target. "We do not expect to make any major changes to forecasts, although there is some downside risk from tough competition on the Internet and potential Turf TV costs," they added.
William Hill said its Internet business had continued to be disappointing owing to technology issues and a tough market, and it had decided to end its existing technology program and seek an external third-party solution. This would result in an exceptional non-cash impairment charge of about us$ 43.2 million in 2007 and a restructuring charge of around us$ 7.8 million in 2008.
The company said it was confident about the outlook for its retail business - which accounts for around 82 percent of total gross win - but its Internet business would remain challenged until the new technology was implemented. William Hill also said that it was in discussions with Turf TV - the television horse racing venture between Alphameric and 30 racecourses.
Rivals Ladbrokes and Coral have already signed contracts with the venture, known as Amalgamated Racing, to receive television coverage of horse racing, and William Hill had been expected to be close to signing an agreement. William said in August that its gross win had climbed by 4.2 percent to us$ 968.2 million in the six months to June 26.