William Hill’s revenues grew by just one percent in the first half of this year, with adjusting operating profits down by 33 percent, amid regulatory headwinds in the UK and expense incurred from its aggressive US expansion.
In the company’s H1 statement, CEO Philip Bowcock described 2019 a “year of transition” for the bookmaker as it struggled to cope with a flagging UK retail sector, improve its online performance and broaden its market share in the burgeoning US sportsbetting market.
In the first six months of the year, the bookmaking giant posted net revenues of £811.7m, up just one percent from the £802.9m it posted in the first half of 2018.
Operating profits took a particularly severe hit from the costs associated with the firm’s US expansion, with adjusted profit nose-diving by 33 percent to £76.2m from the £113.6m posted in the same period last year.
Commenting on the figures in a release, the company said revenues had been hit by the reduction of FOBT staking limits from £100 to £2 in the UK retail sector, but also reflected increased earnings from its US business and additional turnover following the acquisition of online betting firm Mr Green in February this year.
“We are seeing positive momentum in Mr Green,” said Bowcock. “The integration is progressing well and is on track to deliver about £4m of annualized cost synergies this year and £6m thereafter. In the US, we’re building a business with meaningful scale, handling $1bn of amounts wagered in the first half alone.”
But while the company is insisting that its US business will provide a hefty payoff in the coming months, the picture in the UK is looking far less rosy.
In July this year, following the UK government’s decision to radically reduce staking limits on B2 betting terminals, William Hill announced that it would be closing 700 of its betting shops, amounting to almost a third of its 2,300-strong estate.
Speaking to analysts after the release of the company financials, Nicola Frampton, William Hill’s director of UK retail, said the decision to proactively close the shops would give staff “transparency and certainty” and enable the firm to refocus its attention on future revenue streams.
“This has been a really difficult decision particularly for me and it’s not been made lightly,” she said. “However, I think given that the overall triennial impact has been in line with our expectations and the harsh economic reality of the high street, decisive action is absolutely necessary.”
In order to cope with an ailing UK high street, William Hill executives stressed that it would be following a strategy of diversification, with particular emphasis placed on its online gambling business and the potential of the US market.
At present, William Hill is live in eight US states, having signed a nationwide deal with American casino giant Eldorado Resorts in September 2018 to provide its sportsbetting and gaming products across its estate.
Now, with Eldorado having put forward a bid to acquire fellow casino chain Caesars Entertainment, William Hill expects to soon gain access to 34 additional casinos across the United States, with around US$20- 35m additional EBITDA over three years.
Meanwhile, the company has also committed to investing more in its responsible gambling agenda, with Bowcock stressing the need to stay one step ahead of the regulatory agenda and rebuild public trust.
“Underpinning William Hill’s progress is our sustainability strategy and long-term ambition that nobody is harmed by gambling,” he said. “The voluntary whistle-to-whistle ban has begun and we have, together with other leading operators, committed to a significant increase in funding for safer gambling measures, including for treatment. “We continue to work on additional measures to protect our customers and lead the regulatory agenda.”