William Hill canters through third quarter
Bookmaker William Hill lifted net revenues 4% in the third quarter, with growth speeding from the first half of the year thanks to the McGregor-Mayweather fight.
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Amounts wagered at its UK retail shops waned 1% in the 17 weeks to 24 October versus a period last year that was boosted by football's European Championship, and fell 5% in Australia, but online wagers swelled 13% and the US business saw sports bets mushroom 33%.
Net revenues were up 3% in retail and 6% online, with a 2% decline Down Under offset by a 28% uptick in US revenues, to produce the group-wide 4% that leaves growth for the year to date at 3%.
Retail gross win margins improved 0.5 percentage points to 17.6% helped by revenues from fixed odds betting terminals continue to rise, with the government triennial review's likely reduction on maximum bets delayed until January.
The cost of sales was 16% higher with the addition of the horseracing levy and Point of Consumption tax on gaming free bets, while higher marketing spending meant operating costs were increased 8%.
Online win margins shrank 0.8ppts to 7.6%, with US margins down 0.3ppts to 8.0% and Aussie margins bounced back from the first half to rise 0.6ppts to 10.8%.
"We continue to make good progress on our transformation programme, which is on track to deliver £40m of annualised savings by the end of this year," said chief executive Philip Bowcock.
"This is supporting reinvestment in our business, including marketing increases in this second half to promote Online's reinvigorated product and customer experience."
As well as the looming UK regulatory action, William Hill is focused on the 4 December US Supreme Court hearing on the Professional and Amateur Sports Protection Act, with a decision expected next year that offers the potential for US sports betting liberalisation.
"As the largest operator of sports books in Nevada and with our 80-plus year heritage in the UK, we are actively engaged in helping sports bodies, regulators and other interested parties to understand the benefits of having a licensed and well-regulated US betting industry," Bowcock said.
William Hill's share of Nevada sports betting business is around 55%, according to analysts at Bank of America Merrill Lynch.
Shares in William Hill fell in early trade on Monday but by 0930 GMT were pretty much flat, 276.02p.
Broker Shore Capital felt recent robust momentum had been sustained and left its forecasts unchanged for earnings before interest and tax of £269m, in the middle of consensus range of £260-280m, with earnings per share of 23.3p.
Analyst Neil Wilson at ETX Capital noted that online, for a long time the area where William Hill was behind the curve, continues to perform very well and that the US business goes from strength to strength.
"Amounts wagered rose 33% and net revenue was 28% higher. Undoubtedly we can put a large chunk of this improvement down to the Mayweather-McGregor fight in Las Vegas in August. However with the potential for US sports betting liberalisation next year, William Hill is looking very well placed to exploit the opportunity when it comes," he said.
"Australia is tough and will get tougher. The credit betting ban has been passed (commences February 2018) and there is the potential for a so-called ‘point of consumption tax’ to be adopted by individual states... However with the regulatory clampdown it’s all about managing the decline and this means cost control is paramount. Like the UK’s Triennial Review, however, the share price already reflects the worst of the Australian regulatory impact."