William Hill still in the race as online returns to growth

Bookmaker William Hill said it expected full-year profits to be at the top end of guidance as its online arm returned to growth in the third quarter.

Upping investment in its mobile sportsbook has helped turn around the underperforming unit, with online net revenue up 4% in the 17 weeks to 25 October, with online sportsbook revenue up 11% and amounts wagered up 6%.

Its shops on the other hand were less lucrative, with retail net revenue flat and amounts wagered down 5% in the third quarter.

Retail will be boosted by the roll-out of 2,000 proprietary self-service betting terminals (SSBTs) having now been completed and changes to the organisational structure were said to be on track for implementation from 1 January.

Strategic nous was also being added to the boardroom, with news of a revamp that numbered former Coral and Betfair executives John O'Reilly and Mark Brooker to add industry knowhow, and Tesco’s former chief customer officer Mark Brooker.

Group net revenue was up 6% for the third quarter, up 3% in the 43 weeks of the year to date and management said with higher gross win margin in the quarter thanks to favourable football results and efficiency savings identified online, profits should be towards the upper end of its previous £260-280m guidance.

"In this period we have continued to focus on online's turnaround, identifying efficiencies and international growth," said interim chief executive Philip Bowcock, pointing to double-digit wagering and net revenue growth in all three international businesses.

He said significant enhancements had been made to the mobile sportsbook to make it "a market-leading sports betting offering once again" and good progress was being made on the gaming and user experience improvements, helped by the Grand Parade team acquired in August, though the "heavy lifting" will be completed on online changes in the first quarter of next year.

He also pointed to £30m of operating efficiencies identified for next year, with around £15m of digital marketing spending already identified to help drive further improvements in digital growth.

On this, he explained: "With our significantly improved products and user experience, we are confident that this is the right time to invest further in our Online business. Therefore, the marketing efficiencies we are announcing today will be reinvested in driving faster digital growth to benefit future performance."

Investors and analysts were impressed, though whether William Hill remains in play in the mergers and acquisitions market was a subject of debate.

Analyst Nicholas Hyett at Hargreaves Lansdown said that, having considered mergers several other gaming groups, the company finally seemed to be knuckling down to the job of turning the core business around.

"It’s good to see William Hill betting on the core business again rather than rolling the dice on big strategic moves that have so far failed to pay out.”

Neil Wilson at ETX Capital said William Hill was still a takeover target, though.

“Shares in William Hill are up this morning as it seems the bookmaker is turning things around at last and it looks like a very desirable merger target again – if the right suitor emerges.

"At 290p a share the stock is trading around 10% lower from its August highs, when takeover talks were pushing up the price.
So far we’ve had a couple of false starts, with the unsolicited bid from Rank and a proposed merger with Amaya both ending in failure. With the industry going through a phase of consolidation amid tightening regulation, higher taxes and greater competition online, William Hill will still have its eyes open for a strategic deal, but it can afford to wait a little longer for the right partner."