William Hill recommits to doubling profits by 2023

1 March 2019

William Hill reaffirmed its goal of doubling profits by 2023, despite reporting a £721m loss for 2018.

Its strategy, first outlined at its capital markets day in November last year, is centred around three areas: driving digital growth in the UK and internationally; growing a business of scale in the US; and remodelling UK retail.

"We have started delivering on our strategy with the expansion of our US business, being first out of the blocks in all states that have regulated sports betting, and with the acquisition of Mr Green, which will support the build-out of our international digital business,” said chief executive Philip Bowcock.

At the capital markets day it said it was aiming to double online revenues, be the market leader across the US and maximise cash flows in retail while gaining two percentage points in market share.

On the online front, its revenue grew 3% to £616.9m last year, although the company is optimistic about improving on this figure due to its acquisition of Mr Green and also a number of significant hires in the online division.

It also outlined a strategy of moving towards lower-staking recreational players, which, while reducing the average revenue per user, was resulting in a higher number of active customers.

In the US, it reported year-on-year revenue growth of 38%, with rapid expansion plans ahead and a target of gaining a 15% share in all sports betting markets. 

In its results statement, the operator said that market estimates suggested that the US could generate between $5bn and $19bn of sports betting revenues by 2023, depending on how quickly states regulate. It said it aims to grow its US EBITDA from $46.2m last year to c.$300m by 2023.

“This is a major new market opportunity that William Hill is very well placed to pursue as we are the US's leading sports betting company. We aim to maintain our market leadership and intend to enter every state that regulates sports betting.”

In retail, however, revenues were down 2% and that’s before the £2 maximum FOBT stake has even come into effect. The company said it was not “possible to predict with certainty the full impact of this change as it is contingent on customer behaviour changes” and that up to 900 shops could be at risk of closure.

In an analyst note published today (March 1), Regulus Partners said this was “very much the calm before the storm when it comes to retail”.

“The key issue, in our view, is that FOBT revenue (105% of group business FCF contribution) was very easy to generate operationally (requiring next to no skill).

“WH’s new revenue sources are much tougher to deliver operationally, while also having a far more complex and no less challenging regulatory-strategic dimensions (if at least not mono-product centred): William Hill has improved, but whether it has improved enough remains to be seen.”

But Emma-Lou Montgomery, associate director from Fidelity Personal Investing’s share dealing service, was more optimistic about William Hill’s prospects: “The gambling group now knows what it’s up against and has clear plans to turn this into a winner and double operating profits by 2023.

“The US looks to be key for the group, where it has a clear lead.”