Market Watch: Bookies lose out after difficult year

BOOKMAKER William Hill is expected to post a 10 per cent fall in annual profits to around £250 million on Friday as the industry faces headwinds from recession, unfavourable sporting results and weather disruption.

The group – along with the overall gaming industry – endured a difficult summer when English Premier League football matches yielded few draws as well as plenty of victories for favoured teams such as Manchester United and Chelsea.

Margins recovered in the final three months of last year and Hill's online operation delivered a strong performance – pushing revenues up 4 per cent for the year as a whole.

But the company is facing a difficult trading environment and could even find itself on the end of tax-raising measures to help cut the deficit, some analysts fear.

Panmure Gordon's Simon French said: "We believe expectations for UK retail are too optimistic generally despite a likely positive impact from the football World Cup. In addition, recent press reports have highlighted the possibility that gross profits tax could rise from 15 per cent to 17.5 per cent at next month's Budget."

William Hill is also likely to update on current trading after January's snow led to the loss of around 60 racing fixtures.

Results from Ladbrokes said the disruption had seen the amount staked by punters fall 11 per cent so far this year, although profits are ahead thanks to cost-cutting measures, big spending high-rollers and a lower tax bill.

Builders' merchant Travis Perkins will report lower profits on Wednesday although the group has seen recent glimmers of encouragement at the end of a tough year.

National Express reports annual figures on Thursday after a torrid year for the rail and bus firm. It will also mark the first set of figures for new chief executive Dean Finch, the former Tube Lines boss who started at the group on 15 February.

National Express handed its loss-making east coast main line franchise back into state hands in November after running into trouble by overbidding for the deal before recession struck and crippled revenues from the franchise.

The company will also lose its East Anglian and c2c commuter deals in 2011 – three years early – after the embarrassing surrender of the franchise to the government. Meanwhile, the group has faced merger and takeover approaches, as well as damaging trade union action in the past six months.

But it successfully raised 360m in a rights issue late last year and appeared to draw a line under a dispute with its biggest shareholder.

With the row now put to bed and a new boss in place, National can focus on getting the group back in shape.

Its latest figures showed rail revenues were still under pressure and Arbuthnot analysts are pencilling in annual profits nearly halving to 111.6m from 202.4m in 2008.

But National Express said recently that its UK coach business had returned to growth in the final quarter of the year while bus revenues remained "resilient" in the face of higher regional unemployment.

Meanwhile interims from fellow transport group Go-Ahead also on Thursday may show improvements at its bus arm.

It said in December that while rail profits were expected to be broadly half last year's 34.9m due to a reduction in government franchise subsidies, its bus business was forecasted to see interim profits slightly ahead of last year's 31.4m haul.

Week ahead

TOMORROW

BAA, Bunzl, Hammerson (finals); Albemarle & Bond, Waterman (interims); Associated British Foods (Primark) (trading update)

TUESDAY

Brammer, Croda International, Drax, Morgan Sindall, Pendragon (finals); Minerva (interims)

Economy: British Bankers' Association secured and unsecured lending for January

WEDNESDAY

Huntsworth, Logica, Moneysupermarket, St James's Place, Travis Perkins (finals); Barratt Developments, Galliford Try, Kier (interims)

THURSDAY

BAT, BBA Aviation, Capita, Centrica, Communisis, GKN, National Express, Rank, Royal Bank of Scotland, RSA Insurance, Segro, STV, Virgin Media (finals); Dunelm, Genus, Go-Ahead, Hays, Redrow (interims)

Economy: Bank of England Governor Mervyn King to appear at Future of Banking Commission, CBI retail sales figures

FRIDAY

Lloyds Banking Group, Rightmove, William Hill (finals)

Economy: Second estimate of GDP for the fourth quarter of 2009, Land Registry house price index