Disappointing H1 2016 results from William Hill

The UK online and land gambling group William Hill plc has posted disappointing H1-2016 results in the wake of last month’s sudden departure of CEO James Henderson.

Characterising the first half as “challenging, interim CEO Philip Bowcock revealed that the company’s key online vertical (it makes up a third of the business) had seen revenue dip 3 percent and operating profits decline by 33 percent to GBP 43.4 million, saying that this remained a priority in his measures to address the weak performance.

“We have taken considerable steps forward in executing on Online’s improvements but there is still a way to go,” he said on Friday.

Other items in the report included:

* Net revenue up slightly at GBP 814.4 million;

* Group operating profit down 16 percent at GBP 131.1 million;

* Online operating profit down 33 percent at GBP 43.4 million;

* Pre-tax profit up 28 percent at GBP 100.7 million, largely due to exceptional costs booked last year after restructuring the business and revamping its digital operations;

* Adjusted earnings per share down 16 percent at 10.5p;

* Dividend unchanged at 4.1p;

* Management still expects to meet its Full Year profit guidance of GBP 260 – GBP 280 for 2016 (FY 2015 – GBP 291 million);

* Positive Euro 2016 football results (a GBP 36 million gross win) helped offset losses incurred by unfavourable horse racing results such as the Cheltenham Festival;

* Profits up by 4 percent in Retail, which makes up around half the business across William Hill’s 2,300 betting shops, to GBP 94.4 million;

* William Hill’s US division delivered a 49 percent growth in operating profit;

* Deep losses in the group’s Australian business, which experienced a 60 percent dive in operating profits to GBP 3.9 million despite a 12 percent growth in turnover…the subsidiaries Down Under contribute 6 percent of group sales;

The group is currently the target of a joint 888 Holdings – Rank Group GBP 3 billion acquisition attempt (see previous reports) with a share price that has declined 22 percent since the beginning of 2016.

Bowcock identified specific areas that require focus going forward: a digital business turnaround, improving the group technology roadmap, increased corporate efficiencies and expanding international growth.

“While the first half of 2016 has been challenging, William Hill is a strong business with three of our four core divisions performing well,” Bowcock said in a statement Friday.

“Our Retail business is robust, the US operation continues to grow rapidly and the core metrics in Australia are moving in the right direction.

“We have taken considerable steps forward in executing on Online’s improvements but there is still a way to go. The refocused team has delivered substantial upgrades to the mobile Sportsbook customer experience, which is now back to competitive levels.

“Our recent investment in NYX / OpenBet and acquisition of Grand Parade further accelerate our ability to innovate at speed and enhance the customer experience moving forward.

“Looking ahead, our immediate priorities are to continue the recovery in Online, to leverage our technology improvements across the business and to advance a focused approach to international growth.

“Trading is in line with our full-year expectations and we have a strong team in place to deliver on the opportunities before us and to improve the business for the long term. In addition, we see opportunities to benefit from increased efficiencies in certain areas of the business.”

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