SOURCE: Reuters

(London, England) — British bookmaker William Hill Plc (WMH.L: Quote, Profile, Research) expects annual earnings to be just below consensus forecasts as a continued poor performance at its Internet unit overshadowed a strong retail performance, knocking its shares.

The gambling and betting company said in a trading update on Thursday it expected earnings before interest, tax (EBIT) and exceptional items to be around 285 million pounds ($558 million) in the year to Jan. 1.

According to the average of 20 analyst forecasts given to Reuters Estimates, William Hill was expected to report EBIT of around 291.6 million pounds for the year, little changed from 292.2 million the previous year.

Analysts at Cazenove said that the brokerage expected to downgrade its 2007 forecasts by 4 percent and by 7 percent for 2008 following the trading update.

Cazenove, which has an "underperform" rating on the stock, had expected William Hill to report EBIT of around 297 million pounds in 2007.

Shares in William Hill, which have underperformed the UK travel and leisure sector Q.FTASX5750 by more than 7 percent in the past year, were 6.3 percent lower at 406 pence by 1030 GMT, valuing the company at around 1.46 billion pounds.

Analysts at Morgan Stanley, however, said that it was a "solid" trading update and reiterated its "overweight" trading 630p price target.

"We do not expect to make any major changes to forecasts, although there is some downside risk from tough competition on the Internet and potential Turf TV costs," they added.

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