BUSINESS

William Hill expects full-year profit at top end of expected range after boffo Q3

TAGs: 2014 FIFA World Cup, William Hill

william-hill-james-henderson-profitsUK-listed bookies William Hill reported an impressive Q3 trading update on Tuesday and, absent any Q4 catastrophes, expect full-year operating profit will be “at the top end of current consensus range.” Group net revenue rose 23% in the 13 weeks ending Sept. 30 while profit rose 89% thanks to a strong second half of the 2014 FIFA World Cup, favorable margins and an online performance that has new CEO James Henderson (pictured) grinning ear-to-ear.

William Hill’s online revenue rose 55% year-on-year, with sports revenue up 100% and gaming up 23%, while online profits rose a hefty 126%. Online represented 33% of Hill’s overall revenue and the Q3 performance stands in stark contrast to last week’s update from the online-only Bwin.party, whose revenue gained a mere 2% over the same period.

Sports benefited from an 18% rise in online betting stakes, while win rate rose 2.6 points to 9.4%. Mobile sports betting turnover rose 38%, representing 48% of total sportsbook turnover. In-play turnover rose 35%, easily eclipsing the 6% rise in pre-match turnover.

Online gaming revenue rose 23%, driven by a 116% rise in mobile gaming, which represented 31% of overall online gaming (up from 18% last year). Casino accounted for 87% of Hills’ online gaming revenue, with bingo notching 8% and poker adding 5%. The poker vertical was down 20% year-on-year, while bingo rose 4% and casino grew 29%.

Retail remains Hills’ main moneymaker, accounting for 57% of Q3 revenue despite the closure of 82 betting shops earlier this year (and a further 27 closings expected before 2014 is done). OTC betting handle fell 1% but win rate rose two points, resulting in OTC revenue gaining 10%. The fixed-odds betting terminals (FOBT) in Hill’s shops saw revenue rise 8%, helping retail profit rise 31%.

In Australia, Hills’ revenue rose 14% as a 1.6 margin gain helped offset a 3% decline in sports betting handle. The decreased volume is attributed to having “exited now unprofitable clients following the onset of increased race field fees.” Unique active customer ranks rose 18% while cost per acquisition fell 26%.

In Italy, Hills humble-bragged that it’s now the leading online sportsbook with a 14% market share. In Spain, Hills’ share of the sports betting pie rose to 20%. The William Hill US sports betting operations in Nevada reported a 21% rise in handle – mobile grew 88% – and gross win was up 73%. The US division recorded “a small operating profit” versus a small loss in the same period last year.

Looking ahead, Hills is bracing for the double-whammy of the new 15% online point-of-consumption tax that takes effect Dec. 1 and the new 25% machine games duty that kicks in March 1, 2015. Numis analysts expect the two-headed terror will cut around £100m from Hills’ revenue in 2015. Hills shares closed out Tuesday virtually unchanged at 363.3p.

Comments

views and opinions expressed are those of the author and do not necessarily reflect those of CalvinAyre.com