The summer’s World Cup proved a winner for William Hill, and is set to boost its full year figures.
The bookmaker said revenues for the 13 weeks to the end of September rose 23% with profits up 89%, helped by punters placing 80% more bets than in the previous tournament four years ago. So it now expects 2014 operating profits to come in at the top end of expectations, assuming the fourth quarter goes as planned.
Chief executive James Henderson, who only joined in August, said:
The group performed strongly in the third quarter, driven by both favourable sporting results and the continued development of our UK and international businesses.
Positive sporting results in the quarter, including a strong end to the World Cup, have moved us close to or ahead of normalised gross win margins on a year-to-date basis.
Earlier in the year bookies had been hurt by unfavourable - to them - results in the Premier League. Nick Batram at Peel Hunt said:
The third quarter was a complete turnaround from the poor sports results that impacted the corresponding period in 2013 and was further boosted by the World Cup contribution. However, there was also good underlying progress across all businesses. Unfortunately, 2015 sees further cost pressures (particularly taxation) and increased political risk represented by the general election. Therefore, we can’t be more positive than a hold.
Numis issued an add recommendation:
This is a soundly financed market leader with a growing and under-appreciated international footprint. Today’s trading statement should provide reassurance on management’s ability to deliver on the stated strategy: hence our add recommendation.
But the broker also said:
Responsible Gambling Trust/NatCen research into gaming machine play is expected soon and may result in further changes to government policy. Legislation to control play above £50 per spin is expected this autumn with implementation in the first half of 2015. The UK duty at the point of consumption (POC) on online gambling is due on 1 December and Machine Games Duty (MGD) will increase from 1 March 2015.
[There will be] £100m of additional duty costs in 2015. PoC and MGD will cost around £100m next year (pre-mitigation) and our forecasts are for a decline in profit; always a difficult context for a share price to materially outperform in our view.
At the moment, William Hill shares are up 1.2p at 364.6p.
