William Hill’s profit down double-digits in “challenging year”

UK bookmakers William Hill saw their operating profit fall 10% in 2016, a 12-month span their interim CEO called “a challenging year.”

UK bookmakers William Hill saw their operating profit fall 10% in 2016, a 12-month span their interim CEO called “a challenging year.”

Figures released Friday show Hills’ revenue inching up 1% to £1.6b last year, while operating profit fell 10% to £261.5m. Interim CEO Philip Bowcock (pictured) said 2016 had been a tough slog but claimed to see “encouraging signs in all our divisions, in particular Online’s UK business.”

Hills’ overall online revenue was down 3% to £544.8m, representing 34% of group sales. Worse, operating costs rose 5%, pushing online operating profit down one-fifth to £100.5m.

Online sports handle rose 2% to £4.3b, but margins dipped half a point, pushing revenue down 2% to £270m. Online gaming revenue fell 4% to £274m, in part due to the UK’s new ‘time-out’/automatic self-exclusion rules.

Hills’ in-house Vegas casino products reported flat revenue of £167.3m while the Playtech Casino fell 6% to £81m. Bingo continued to decline, falling 14% to £20m, but not as fast as poker, which swooned 37% to £6.5m.

Mobile increased its share of overall revenue, thanks in part to the launch of a “substantially improved” betting app ahead of the Euro 2016 footie fest. Mobile accounted for 70% of sports revenue (up from 64% in 2015) and 53% of gaming (from 41%).

Hills’ operations in Italy and Spain’s regulated markets produced a combined operating profit of £1.8m, up from a £400k loss in 2015, as wagering rose 29% year-on-year. The Spanish results benefited mainly from the approval of online slots in mid-2015.

William Hill Australia reported betting handle up 18% in local currency terms. Weaker margins limited revenue’s rise to 3% while operating profit was basically flat at A$27m despite a dramatic reduction in staffing costs after shifting its back office to Manila. In-play accounted for 11% of 2016’s handle but this fell to 6% since the government announced plans to ban in-play betting.

In the United States, betting handle was up 21% in local currency – mobile wagering rose one-third, accounting for 52% of all bets – while revenue gained 16% thanks to the addition of five new Nevada sportsbooks last year. Hills US now controls 108 of Nevada’s 192 books and its market share in the state gained five points to 26%.

At the retail level, overall revenue was flat while profit slipped 5% to £162m. Sports betting handle and revenue fell 4% and 5%, respectively, while gaming machine revenue gained 6%. Hills rolled out 2k self-service betting terminals (SSBT) last year, and the machines contributed 7% of overall wagering and 29% of football wagers in Q4.

Trading in the first seven weeks of 2017 has shown “positive trends” in amounts wagered across all four divisions, with UK online sports wagering up 10% and gaming revenue up 8%.

The company announced that it plans to spur growth by investing £30m over the next three years in developing a new “next generation” global platform. The platform is being developed with tech provider OpenBet – in which Hills holds a minority stake – and Bowcock said the first results should start to show in 2018.

Reports this week suggested Bowcock’s interim CEO designation would be made permanent but the company made no such announcement on Friday. Chairman Gareth Davis said only that an appointment was coming “in a few weeks’ time.”

Source: Calvin Ayre

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