Recovering William Hill bets on World Cup success

The bookmaker William Hill saw its luck turn in the final weeks of 2005, forcing it to retract an earlier profits warning yesterday.

The group said it expected full-year profits to 27 December to be "slightly in excess" of the lower range it set in November after the favourites stopped winning the big races. Its shares rebounded 22.5p to 558p.

Hills completed a hat-trick of warnings about lower profits after Paddy Power and Ladbrokes alerted the market to their own string of bad luck. In November, Hills shaved up to £30m off its profits guidance, reducing the consensus range to between £230m and £240m from £240m to £260m.

Tom Singer, the chief operating officer, said: "The past six weeks have been kinder to us than we anticipated in November. It's very hard to predict results in the short term."

It was a tough second half-year for William Hill, which suffered as a result of a long sequence of correct tips from an influential tipster from the Racing Post. Tom Segal, who writes the newspaper's Pricewise column, tipped 10 consecutive winners during the summer.

Mr Singer said: "Time has proved him to be only human and results have reverted to long-term norms."

On average, Hills bargains on the favourite romping home in first place for 30 per cent of the time; the second favourite to win in 22 per cent of races; and the third favourite to win 15 per cent of the time.

Hills became the UK's biggest bookmaker last summer after its acquisition of Stanley Leisure's betting shops. Analysts predict a further wave of industry consolidation for 2006, given that Ladbrokes has split from its hotels sister company and Rank has finally sold the bulk of its legacy media assets.

Asked whether Hills planned to revive its merger talks with Rank, Mr Singer said: "Who knows what the future brings?" He said there were "no ongoing discussions", pointing to the fact that Hills was continuing to buy back shares in market, which it would not be allowed to do if it was in sensitive negotiations.

Bookmakers are looking forward to a better 2006, thanks to this summer's football World Cup. But that was not enough to prevent scepticism from Merrill Lynch, which told investors: "We remain concerned about the underlying structural issues at work within the industry.

"Though the continuing £250m share buy-back is likely to act as a support for the shares, continuing trading volatility and integration risk provide further uncertainty in the near term."