William Hill profit falls 14% as football favorites live up to their potential

william-hill-profit-fallsUK bookies William Hill saw operating profit fall 14% in Q1 as football favorites lived up to their potential, handing the company “two substantial loss-making weeks.” The decline was much more pronounced at the retail level (-25%) than online (-6%), reflected in the net revenue stats, which were down 2% at retail but up 4% online.

Hills’ retail operations accounted for 57% of group revenue. Retail OTC turnover rose 3%, with football wagers rising 20%. But win margins fell 3.1%, pushing OTC revenue down 13%, enough to offset an 11% gain in machine gaming revenue. The March 1, 2015 imposition of the new 25% duty on fixed-odds betting terminals (FOBT) has convinced Hills to close 109 of its 2,434 betting shops by year’s end. Hills’ expects this will cost the company between £23m-24m and may result in the redundancy of as many as 420 employees.

Hills’ online operations provided 32% of group revenue. Sports betting turnover was up a stellar 39% while mobile was up 78% and accounted for 45% of total sportsbook turnover. But betting revenue fell 7% thanks to the aforementioned loss-making weeks. Fortunately, online gaming revenue rose 16%, with casino revenue up 22%, accounting for 46% of all online revenue. Mobile gaming revenue rose 142%, representing 27% of online gaming revenue. Poker revenue fell 15% and bingo fell 5%.

Hills’ Australian operations accounted for 8% of group revenue, but year-on-year comparisons were seriously skewed by Hills’ mid-2013 acquisition spree. Hills’ Aussie operations – now including Sportingbet, Centrebet and TomWaterhouse.com – saw a 484% gain in betting handle, while net revenue rose 499%. On a pro forma basis, betting handle was up 11% and revenue up 3% while profit fell 9%. Improvements to Aussie marketing efforts have resulted in an 11% reduction in cost per acquisition and new account growth is up 8%.

Hills’ ‘other channels,’ including US operations and telephone wagering , accounted for 3% of group revenue. William Hill US saw handle rise 23% and gross win up 35% thanks to a favorable Super Bowl result. Operating profit rose 188%. Telephone wagering handle fell 13% and gross win fell 28%, leading to “a very small operating loss.”