888 Holdings sees higher earnings this year

14th Apr 2023 07:18

(Sharecast News) - Shares in William Hill owner 888 Holdings surged by a fifth on Friday as the bookmaker said it expected "significantly" higher adjusted core profit for this year.

The bookmaker posted an 82% rise in adjusted core profit to £217m for 2022 as earnings from William Hill, which it bought last year, offset a hit from new online gambling safety rules in the UK.

On a pre-tax basis the company swung to a £115m loss from a profit of £59m a year earlier. 888 said current-year revenue could be lower by a low-to-mid single digit percentage.

The company said it was intent on cutting costs and focusing core and growth markets. It also concluded an internal investigation that was launched to probe failure to follow some compliance processes in the Middle East which will hit revenue by £25 - 30m and said it has implemented "robust policies and procedures" to reopen accounts and onboard new customers in the region.

The integration of William Hill was expected to unlock around £150m in cash synergies a year.

Interactive Investor Victoria Scholar warned that the UK government's Gambling Act white paper was still looming over the industry, with potential limits for online betting stakes.

"888 has been dealing with a tough macroeconomic backdrop, high costs because of the inflation backdrop and increased interest costs. Business in the UK and Ireland struggled in the first quarter amid the impact of safer gambling changes while international online also suffered partly because of compliance changes in the Middle East," she added.

"Shares are enjoying a boost nonetheless as investors cheer its rosy profit outlook. However, 888 has sharply underperformed the wider market this year down by around 20% and is down nearly 70% year-on-year, in stark contrast to Flutter which is up over 70%."

Reporting by Frank Prenesti at Sharecast.com