William Hill have released their results for the 53 weeks to January 1st 2019 and it paints a bleak picture for the retail side of the business ahead of the planned reduction in maximum stakes for their FOBT’s later this year.
The value of their retail business was actually reduced by £900m as a direct result and we are sure they won’t be the only betting firm with a heavy retail presence to offer worrying results.
The rest of the business performed quite well with group net revenue rising again to £1.62b eith adjusted operating profit falling 3% to £266.8m.
The change in FOBT’s comes into effect in April this year with maximum stakes being slashed from £100 to just £2. This is expected to cost around £100m per year and is likely to result in job losses and store closures.
The reporting period also saw William Hill increase their online presence with the acquisition of the Mr Green brand which bodes well for the future of their online revenues. Whether this will offset the likely downturn in retail revenues remains to be seen.
CEO Philip Bowcock release a statement saying “2018 was a busy and decisive year for us. Key regulatory decisions in the UK and US gave us much needed clarity to set a new five-year strategy and a goal to double profits by 2023. We have three businesses at different stages, with online growing in the UK and diversifying internationally, retail being remodelled in response to the new £2 stake limit, and rapid expansion in the US sports betting market. Underpinning this, we have taken a clear leadership stance around safer gambling with our Nobody Harmed ambition. Against this backdrop, we delivered a good underlying performance in online, strong growth in the US existing business and a resilient retail out-turn in the face of difficult high street conditions.”
The US expansion he referred to was a 42% net revenue increase and 91% adjusted operating profit growth in the 53 week period. They have a 34% market share in terms of revenue across all 7 states are regulated for betting.
After the announcement shares fell briefly before recovering to finish ahead of the previous days total at 188p.