LONDON (Alliance News) - With little in the economic calendar Wednesday, company news was at the centre of attention in London, with a profit warning from bookmaker William Hill making it the worst FTSE 250 performer and dragging down the rest of the UK betting sector.
Meanwhile, shares in Premier Foods soared after it rejected two takeover offers from US spices and herbs manufacturer McCormick & Co.
William Hill said a weaker-than-expected online performance in the year so far, means its 2016 profit will be below expectations. In the period to March 20, the company said its online business had been hit by regulation and adverse sporting results.
William Hill saw gross win margins in online fall below expectations for the period to 1.9 percentage points, as a result of unfavourable European football results and the "worst Cheltenham results in recent history".
From a regulatory perspective, the level of active players has decreased due to an acceleration in the number of time-outs and automatic self-exclusions. If this trend persists, lower revenue will reduce online's profit by between GBP20 million and GBP25 million in 2016.
Taking the disappointing online performance into account, the bookmaker said overall group operating profit for 2016 is now expected to be in the range of GBP260 million to GBP280 million, down from GBP291.4 million in 2015.
William Hill was the worst performer in the FTSE 250, down 11%. The warning also hit William Hill's peers, with FTSE 100-listed Paddy Power Betfair down 1.7% and mid-cap Ladbrokes down 1.8%.
Paddy Power Betfair said Chief Operating Officer Andy McCue will leave the group on April 30 in order to "pursue new opportunities". McCue was chief executive of Paddy Power from January 2015 up until its merger with Betfair in February 2016. He joined the Paddy Power business in 2006.
London stock indices were just a touch ahead. The blue-chip FTSE 100 index was up 0.2%, or 12.72 points, to 6,205.46.
The FTSE 250 was up 0.2% at 16,932.31 and the AIM All-Share was up 0.3% to 710.86. In Europe, the French CAC 40 was up 0.4% and the German DAX 30 was up 1.1%.
Ahead of the open on Wall Street, futures pointed the DJIA and S&P 500 up 0.1% and the Nasdaq Composite flat.
Premier Foods' shares surged 63% higher to 51.25 pence after it disclosed two takeover approaches had been made by US spices and herbs manufacturer McCormick & Co, though both were rebuffed.
Premier also said it has signed a cooperation agreement with Japanese noodle maker Nissin Foods Holdings Co Ltd and affirmed its expectations for the full year.
The company, which makes Bisto gravy and Mr Kipling cakes, said Baltimore, Maryland-based McCormick made a highly conditional approach at an indicative price of 52 pence per Premier share in cash in February. Premier rejected that bid on the basis is "significantly undervalued" the group and its prospects. That first bid valued Premier at around GBP429.4 million.
McCormick then returned with a second offer of 60p per share in cash, which Premier rejected for the same reasons, adding it did not think the proposal tabled by McCormick would be in the best interests of the company or its shareholders. The second bid valued Premier at GBP495.5 million.
In the FTSE 100, DIY retailer Kingfisher was the best performer, up 3.6%. The company reported a drop in profit in its recently-ended financial year as it booked higher exceptional costs and revenue was hit by negative currency movements, but said it is on track with its turnaround plan.
Kingfisher said pretax profit in the year ended January 31 dropped to GBP512 million from GBP644 million the year before, as revenue fell to GBP10.44 billion from GBP11.0 billion.
Davy Group and Cantor Fitzgerald said the retailer's underlying profit of GBP686.0 million ahead of their expectations, but Cantor warned that the group's restructuring plan will increase costs in the short term.
Gold miners were amongst the worst performers in the blue-chip index, with Randgold Resources down 1.9% and Fresnillo down 1.5%. The stocks tracked the price of gold lower, as investors pulled out of the safe haven asset following Tuesday's terrorist attacks in Brussels.
At midday Wednesday, the metal was quoted at USD1,233.25 an ounce, versus USD1,250.44 at the London equities close on Tuesday.
Game Digital was one of the worst performers in the FTSE All-Share, down 9.4%. The video game retailer said pretax profit and revenue fell in the first half of its financial year as the group struggled against a tough UK market.
Game said its pretax profit for the 26 weeks to January 23 was GBP22.5 million, down 32% on the GBP33.2 million posted a year earlier, as revenue declined to GBP549.2 million from GBP585.9 million, off 6.3%. In response to the problems, the group slashed its interim dividend 77% to 1.67 pence per share from 7.35p a year earlier.
In London's junior AIM market, Golden Saint Resources shares were up 14% after it submitted applications to renew its three licences in Sierra Leone and expects approval to be granted by authorities before the end of the first half of 2016.
Golden Saint said applications to renew the Tongo, Baja and Moa licences have been submitted to the National Minerals Agency, which has also indicated the company has met all necessary obligations that should mean the applications will be approved.
Still ahead in the economic calendar, US new home sales data are at 1400 GMT and the Energy Information Association oil stocks at 1430 GMT.
By Neil Thakrar; neilthakrar@alliancenews.com; @NeilThakrar1
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