888 Holdings ups cost savings goals after William Hill takeover

888 Holdings has set out more ambitious cost-cutting targets amidst a challenging market backdrop and increasing debt costs related to its acquisition of William Hill’s non-US operations.

The FTSE 250 business said it would seek synergies of approximately £150milllion from the bookmaker’s takeover, compared to a previous aim of at least £100million.

It also plans to accelerate next year’s savings goal from £54million to £87million and more than double the amount saved from capital expenditure-related projects.

Tuesday’s announcement by the group comes ahead of a capital markets meeting in London, where it will launch a new strategy outlining a series of revised financial objectives.

By 2025, the Gibraltar-based company wants to achieve revenues exceeding £2billion, earnings per share of at least 35p and reduce net debt to less than 3.5 times adjusted underlying earnings.

888 hopes to accomplish the EPS target through a mix of sales growth, boosting profit margins and cutting debts, the latter of which rose significantly in order to fund the purchase of William Hill International.

Completed in July, the £1.95billion deal saw 888 take control of around 1,400 UK betting shops, along with European online gaming brands Mr Green and Redbet, from casino operator Caesars Entertainment.

But since initially announcing the takeover in September 2021, 888 said that ‘material external changes’ had led to some greater difficulties facing the business.

The pandemic-induced surge in digital gambling has faded, skyrocketing energy prices have caused inflation to surge, and the cost of servicing debt has risen as interest rates have spiked.

In a third-quarter trading update released last month, the company estimated cash interest costs would be about £170million next year, compared to a previous forecast of £130million to £140million.

At the same time, it blamed new safety regulations in the United Kingdom and the closure of operations in the Netherlands for a drop in overall turnover.

Since reporting those results, 888 said its betting revenues had been ‘slightly lower than expected,’ although trading had been ‘broadly in line’ with anticipations.

Under a ‘strategic framework’ intended to improve performance, the firm aims to narrow its focus to a small set of key markets and integrate the different subsidiaries onto one global platform.

It noted that the different brands under its control were operating across many separate platforms and regularly competing against each other, causing weaker profit margins than gambling sector rivals. 

Itai Pazner, 888’s chief executive, said: ‘We are focused on building a customer-led business with a portfolio of world-class brands that provide complementary offerings, supporting our ambitions to drive market share growth in some of the most attractive betting and gaming markets in the world. 

‘This will be enabled by a scalable, unified proprietary technology stack that will underpin our product and content leadership focus.’

were 0.3 per cent higher at 103p when trading closed on Tuesday, yet their value has declined by just over half in the past six months.