William Hill profit set to beat forecasts

The gambling giant, which employs 1,300 people in Leeds, said the favourable results helped to boost its retail division and increase total group profits.

It expects operating profit from continuing operations in 2019 to be between £143m and £148m.

The company said it made good progress despite a challenging regulatory backdrop which saw its retail business hit by a heavy reduction in the maximum stake for fixed-odds betting terminals (FOBTs).

In April, the Government enforced a reduction of the maximum stake of these terminals from £100 to £2, significantly affecting the revenues of high street betting shops.

William Hill said in November that it was on track following the closure of 700 high street shops.

It said this would help to mitigate the impact of changes to FOBT rules.

In its latest update, the betting firm said that its retail business is now expected to post profits ahead of its forecast of between £50m and £70m.

It said the retail arm was boosted by favourable sporting results in December, while the company’s gaming division also performed strongly.

UK online revenues grew in line with market expectations over the quarter, while net revenue was broadly flat in its international online business.

William Hill added that its US business saw strong growth in the fourth quarter on the back of investment and increased wager size, helping the US arm to break even.

William Hill’s chief executive Ulrik Bengtsson said: “The group has delivered a strong operating performance, ahead of our expectations and against a challenging regulatory backdrop.

“We made good progress on a number of fronts, including our retail business, online and in the US, enabling us to deliver on our long-term strategic ambitions.

“We look forward to building on these efforts in 2020 with a strong focus on customer, team and execution.”

The trading update came as gambling firms face further scrutiny from regulators, with the Gambling Commission expected to outline plans to ban bookmakers from taking credit card deposits for betting online later this month.

Analyst Greg Johnson at Shore Capital said: “Looking forward, we would expect further underlying progress in the current year, supported by Euro 2020, synergies from last year’s Mr Green acquisition and further tech-roll outs in digital.

“However, it’s the US opportunity that excites most, with William Hill building a presence throughout the regulated (and growing market). The merger between Eldorado and Caesars could be a game-changer on this front, initially bringing additional sports books across the US.

“We see little in the current valuation for US sports betting in what could eventually be a $20bn revenue market (retaining a 5 to 10 per cent market share long-term could be worth more than the current market capitalisation). We retain our ‘buy’ stance.”

British betting companies have been pivoting to the US after the US Supreme Court overturned a federal ban on sports betting, while proposed regulatory curbs in the UK are posing a challenge to gambling firms at home.

Separately, the company announced that its chief financial officer Ruth Prior intends to step down from her role.

Ms Prior is to return to the private equity sector, joining Element Materials Technology, as CFO.