William Hill in online profit warning

iam Hill has issued an online profit warning while also confirming its interest in investing in supplier OpenBet.

The operator has endured a weaker than expected online performance since the turn of the year and expects online profit to be reduced by £20m-25m, should current trends continue.

Hills currently expects group operating profit for 2016 of between £260m-£280m, subject to normalised gross win margins in the rest of the year.

Group operating profit for the full year 2015 was £291.4m, which included £126.5m in online operating profit.

A trading update for the period to 20 March 2016 blamed an acceleration in the number of time-outs and automatic self-exclusions over recent weeks, which has impacted online and in particular gaming.

Gross win margins for online stand at 6.2%, which is 1.9 percentage points below expectations, affected by European football results and the "worst Cheltenham results in recent history".

William Hill shares fell more than 13% to 322p in early trading.

Following the appointment of Crispin Nieboer as Interim MD, Online in January, the firm is to refocuse the business on maximising UK customer yields, improving performance in non-core markets and assessing opportunities for cost efficiencies.

William Hill also highlighted the need to focus on "improving the quality of account acquisition".

The firm added: "The broader William Hill Group continues to trade well and is overall in line with our internal expectations."

CEO James Henderson said: "Today’s 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.”

Meanwhile the company has confirmed that it is in "advanced discussions with a partner" which would see it invest in supplier OpenBet.

The partner isn't named, although rumours surfaced last month that Hills were backing an acquisition bid for OpenBet by provider NYX Gaming Group.

The Telegraph newspaper reported that OpenBet could be sold for between £250m and £300m.

At the time, David Jennings of Davy Research told Gambling Insider: "Any branded B2C operator taking control of OpenBet is probably going to be the least-favoured outcome among the other operators that use OpenBet.

"That said, from an investor standpoint, the market would need to be convinced that the returns on such an acquisition stack up, regardless of the strategic benefits of completing such a transaction.

"That might be a tricky case to make if the mooted figure ends up being correct.”