BUSINESS

William Hill’s online struggles drag operating profit down 16%

TAGs: Euro 2016, William Hill

william-hill-online-gambling-profitsUK bookmaker William Hill’s H1 results were saved by its core retail operations, as the digital division continues to struggle.

For the 26 weeks to June 28, Hills’ overall revenue nudged up 1% to £814.4m, but operating profit fell 16% to £131m. Hills’ much publicized online woes were evident in management’s statement that ‘three of our four divisions are performing well.”

Online revenue was down 3% to £277m, while operating profit fell one-third to £43.4m. Hills noted that it had exited five markets in mid-2015, making for tough comparisons. The late-2015 imposition of new time-out/self-exclusion tools also took a toll on weekly active customers.

Hills’ sports betting story mirrored its rivals: Cheltenham, bad; Euro 2016, good. Online sportsbook turnover and revenue each slipped 1% to £2.23b and £140m, respectively, while gaming revenue was off 6% to £137.3m. Mobile claimed 70% of sports revenue (up from 63%) and 51% of gaming (from 39%).

William Hill Australia saw betting turnover rise 12% yet poor horseracing margins caused revenue to fall 10% to £47.7m. Operating profit fell even harder, down 60% to £3.9m, due to the ongoing consolidation of Hills’ Aussie brands. Hills said it expects to migrate the remaining Centrebet customers to the main Hills site before the year is through.

William Hill US remains only 2% of the overall revenue pie but continues to post the largest growth rates. Betting turnover in Nevada was up 39%, revenue rose 16% to £18.5m and operating profit jumped 49% to £6.4m.

As for Hills’ dominant retail arm, revenue and operating profit were each up 4% to £467m and £94.4m, respectively. Despite a 4% fall in OTC wagering, sports revenue rose 2% to £225m thanks to a 19% margin (compared to 7.3% online). Gaming machine revenue rose 6% to £242.2m.

As for fixing what ails its digital division, Hills says it has addressed the problems that plagued its wonky mobile sportsbook app earlier this year. Hills expressed confidence that its recent technology investments – an £80m stake in NYX/OpenBet and the acquisition of Grand Parade – will help deliver the necessary tweaks to both front- and back-end operations as warranted.

Hills’ report graphically depicts the ebbs and flows of the modern bookmaker. Leicester City’s surprise Premier League title cost Hills nearly £3m, while Russia’s late goal against England in Euro 2016 added £5m to Hills’ coffers. Euro 2016 margins were an impressive 22.4% at online/telephone and a staggering 37.9% at the retail level.

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