William Hill beats sportsbook targets a year early in Q1 figures
Online turnover surpasses OTC, amounts wagered on mobile rise above £15m in strong first quarter
Strong performance from online and mobile sportsbook in the first quarter saw William Hill achieve two of its key growth targets a year ahead of schedule, the company has announced in its results for the three months ending 2 April 2013.
The operator saw group net revenue rise 15% year-on-year, while operating profit grew 8% for the period. CEO Ralph Topping (pictured) said the company had seen “a successful start to 2013″.
“You’ve heard talk about it being a tough quarter. I don’t think so,” he continued. “What we’re seeing is the benefit of having two strong channels. You can’t be a retail business without a strong digital business. You’ve got to look at both businesses together to judge the health of our business. We have a good balance of a resilient retail business and good online growth.”
Q1 saw sportsbook net revenue grow 47% year-on-year as amounts wagered increased 30% compared to the same period last year. This was aided predominantly by strong results around the Grand National, where online sportsbook turnover grew to £66m “ the operator’s best-ever return from the event.
As a result the company surpassed one of its targets for the online division 12 months ahead of schedule, with online turnover surpassing that of over the counter (OTC) operations.
Supporting the online growth, mobile sportsbook amounts wagered grew 145%, accounting for 35% of total amounts wagered over the quarter and prompting Topping to set a new target of 40% by the end of the year. Such growth led to the company hitting its second target a year early, with amounts wagered on the channel surpassing Hills’ £15m target to average £18.2m a week. “When we give you targets, we hit them,” Topping added.
However, gaming performance did not quite hit the heights of sportsbook, rising 2% after casino growth of 4% was offset by declines in poker and bingo, and hit by withdrawals from a number of markets in 2012, including Germany. If those markets had been included in the results, it would have seen 8% growth.
The online division delivered 21% total growth in net revenue, with operating profit rising 13% to £43.3m. Playtech, receiving a share of the division’s profits for the last time after William Hill’s buyout of the 29% stake was confirmed earlier this week, will receive £12.6m for its non-controlling interest.
On the subject of the acquisition Topping said it was “pleasing to receive such clear support from shareholders for the William Hill Online acquisition and the rights issue”. He maintained that discussions with Playtech remained “really positive”, saying that the acquisition of WHO would give the company “more flexibility to use the online people in other areas of the business”.
“We welcome that and will see the benefits of that in due course,” he added.
This morning’s figures do not include revenues from Sportingbet’s Australian operations. Hills’ CFO Neil Cooper explained they were “not material” and therefore would not be split out.
Topping said that having spent time with the Sportingbet Australia team, he was “confident of its ability to take advantage of the opportunities in this key territory”.
He also briefly mentioned Nevada operations, where Hills acquired the American Wagering and CalNeva sportsbook businesses in April 2011. While he said he was “pleased” with the businesses’ first quarter performance, they were “going through a quiet time” with most wagering activity expected to be seen around the American football season.
Despite the company’s strong performance analyst Nick Batram sent out a ‘Hold’ recommendation, explaining that while Hills “continues to deliver an impressive performance irrespective of the woes at Ladbrokes “¦ this is largely reflected in the price.”
“This was a strong update and, while a continued run of favourable sports results is a factor, this should not detract from a business with a clear strategy that is being impressively executed,” Batram said. “There are some headwinds on the horizon, and the gross margin will come back at some point, and the rating looks about right for now.”