William Hill hails revenue growth amid 11% drop in profits

William Hill has claimed wagering growth across all four of its divisions in the first half of 2017, although profit before interest and tax was 11% lower than the corresponding period in 2016.

However, given that there was some revenue growth (3% to £837.0m) against last year’s figures which had been boosted from the Euro 2016 tournament, and adjusted operating profit (profit before interest and tax, excluding exceptional items and other defined adjustments) was down just 1% to £129.5m, there were several reasons to be optimistic.

CEO Philip Bowcock claimed the firm had achieved ‘good progress’ against its three strategic priorities: “Our product improvements combined with improved marketing have seen both existing customers respond positively and the number of new customers start growing again during the period. As a result we are seeing good momentum building in Online’s performance.

“In Retail we made market share gains, with growth in both sports betting, despite the lack of a major international football tournament, and gaming revenues. Internationally, our US business continues to perform well and in Australia, with the upcoming Spring Carnival key to the full-year results, we are competing hard and diversifying our product range.”

Bowcock said that one of the firm’s strategic priorities was to grow its UK market share. The firm’s retail estate provides 55% of group revenue although adjusted operating profit dropped 14% to £80.9m over the period, with increased staff costs and poor sporting results cited as a cause.

While sportsbook net revenue was down 7%, removing the impact of Euro 2016 out of last year’s figures would have seen growth of 3%. Revenues from gaming machines was once again up, by 3% to £250.1m. FOBTs accounted for 54% of revenues in the retail space for the first half of 2017 and, given they are currently threatened by the DCMS’ triennial review, it is a bad time for the firm to be even more dependent on them. It is little wonder that the firm is investing in its own SSBT product and working on enhancing its omni-channel offering.

The company added: “The gross win margin, towards the lower end of our guided range of 17% to 18% for the year as a whole, was impacted by volatile sporting results across horseracing and football. The period saw favourable results from the Tier 1 Cheltenham Festival and Royal Ascot, which softened the impact of the lower margin Tier 2 and Tier 3 results as well as a poorer Aintree festival. Football results were strong at the start of 2017 but very poor towards the end of the season across domestic and European leagues.”

Online in the UK had a little more to be positive about. During the period, Online grew UK amounts wagered 13% and UK gaming net revenue 9%. Looking at the UK performance for the year up to Week 23 (prior to overlapping the peak prior year EURO 2016 trading period), Online delivered amounts wagered up 15%, gaming net revenue up 8%, new accounts up 5% and active customers up 7%. William Hill believes these are at or above market growth rates.

Bowcock added: “Earlier in the year we targeted £40m of annualised savings as part of our transformation programme and we are on track to deliver this by the year-end. In addition to these savings, the programme has sparked initiatives to further improve our products and customer experience, accelerate our top-line growth and increase efficiency. We are confident about delivering a good outturn in 2017 and beyond.”

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