H1 2014 profits slide at William Hill plc

Top British online and land bookmaker William Hill’s profits fell by 26 percent in the first half of 2014, with the company attributing the drop to “more customer-friendly results”.

But the bookie said that betting on the soccer World Cup this year had increased by 80 percent from the last time the tournament was played in 2010, and this had helped to offset the impact of unfavourable sports results earlier in the year.

The tournament saw William Hill take GBP 172.5 million in wagers, besting the punters to GBP 27.8 million in gross wins. Wagering from retail, online and telephone was up 80 percent to GBP 208 million on the last World Cup in 2010, however gross win margin was down to 18.4 percent from 27.9 percent, reflecting the unpredictability of this year’s competition.

Group revenue rose 7 percent to GBP 805 million in the 26 weeks to July 1, while operating profit dipped by 2 percent to GBP 177 million…both figures were slightly ahead of consensus forecasts.

James Henderson took over as chief executive on Friday, replacing Ralph Topping (see previous reports).

“I will be looking hard at how we can continue to create shareholder value in developing a focused but internationally orientated gambling group,” Henderson said in a statement.

“What excites me most is the potential for the business both in the UK and internationally as well as potential in both the digital world and on a multi-channel basis. We have an outstanding team whose insights are being applied to our international operations.”

Henderson faces some daunting challenges; he takes the reins when the gambling sector is facing financial and regulatory pressures, with the British government tightening controls on betting shops and increasing taxes on online gambling and high stakes gambling machines, the Reuters news agency notes.

Profits stand at GBP 98.6 mllion for the first six months, whilst earnings per share (adjusted) fell by 16 percent to 14.1p in the 26 weeks to July 1.

Key operational highlights from the report include:

* Successful diversification continues, with 52 percent of operating profit from digital channels and 17 percent of revenues from international markets;

* Record-breaking World Cup performance with Online wagering for the tournament up 211 percent on 2010;

* Continued strong growth in Online Sportsbook turnover, up 41 percent with mobile wagering up 74 percent but net revenue growth rates diluted by less favourable sports results;

* Online gaming net revenue growth continues apace, up 18 percent, benefiting from 146 percent growth in mobile gaming;

* Retail net revenue flat and operating profit down 7 percent, with the impact of less favourable sports results partly mitigated through effective cost control;

* Australian operating profit near doubles as business progresses well with wagering up 10 percent, unique actives up 21 percent, new accounts up 14 percent and cost per acquisition down 36 percent;

* Strong US performance with wagering up 22 percent and operating profit up 383 percent;

* Healthy interim dividend growth, up 8 percent.