Join our community of smart investors

William Hill suspends dividend in coronavirus warning

The gambling operator earned over half of its revenues last year from sports bets
William Hill suspends dividend in coronavirus warning

William Hill (WMH) has scrapped its dividend and warned of a possible £110m hit to profits in response to the abandonment of elite sporting events. The 86-year old gambling company generated 53 per cent of its 2019 revenues from sports betting.

IC TIP: Sell at 52.52p

William Hill’s announcement follows Flutter Entertainment’s (FLTR) forecast on Monday that the cancellation of key sporting events could reduce its cash profits by a range of £90m-£110m. Flutter, which owns Betfair and Paddy Power, is even more exposed than William Hill to the current crisis, having earned 78 per cent of its turnover last year from sports bets.

William Hill’s own estimates forecast an impact to cash profits ranging from £100m to £110m. This is based on the assumption that the Euro 2020 football championship would not take place this year (which has since been confirmed), along with a host of other sporting delays and the closure of its UK retail outlets for one month. An additional month of shop closure would hit cash profits by a further £25m to £30m. William Hill has been dealt a further blow by the news that horse racing in the UK has been suspended until the end of April.

The company has decided not to propose its 5.34p final dividend at its May annual general meeting. William Hill emphasised that it has an undrawn committed revolving credit facility of £425m and said that it is working with its banking partners to enhance its liquidity. It also said that it had a number of options available that will allow it to reduce its variable costs.