Gambling group William Hill (WMH) reported full-year adjusted operating profits at the upper end of market expectations, down 37% to £147m on revenues 2% lower at £1.6bn. The shares lost 5% to 167.7p.

Chief executive Ulrik Bengtsson commented, ‘2019 was a year of transition during which we executed on our ambition to diversify internationally with the acquisition of Mr Green and the continued strong growth of our US business.’

US PUSH

A quarter of revenues are generated outside the UK, up from 18% in 2018 and the ambition is to increase this further while maintaining market share within the home market.

The growth focus will be squarely on the US market where around 55% of all US online bets are made through the groups’ online channels. Revenues grew 38% to £126m in 2019 and the plan is for the overall US business, to break-even in 2020.

Management estimate that the US market will be worth $5bn to $19bn by 2023.

There are currently 14 states where sports betting are live and William Hill is operational in nine of them, having launched in New Mexico, Iowa and Indiana during the year, capturing 24% of the regulated nationwide market.

The company anticipates the launch of up to eight new states which will incur the inevitable start-up costs.

A key part of the US strategy is reliant on local partner tie-ups and recently the company cemented a deal with CBS Sports which grants exclusive rights to promote the William Hill brand across all the US firm’s digital properties.

DECLINE IN UK RETAIL

Around 45% of revenues derive from the UK retail betting despite the company closing 713 shops in the third quarter of 2019, leaving the estate at 1,568 shops.

Retail revenues declined 13% on a like-for-like basis and 20% overall but operating profits came in ahead of analysts’ estimates at £83m, down 45% year-on-year.

The outlook is for the UK betting shop industry to continue shrinking and the company guided for 2020 operating profits to be in the £60m to £70m range. (-22%)

ONLINE

Roughly half of revenues are generated online with two-thirds coming from punters based in the UK. Including the acquisition of Mr. Green revenues grew 16% to £738m while operating profits fell 9% to £119m.

As a consequence of purchasing Mr. Green 35% of revenues are delivered outside the UK and there are plans to launch the brand in Spain during 2020.

The company reckons the credit card ban which comes into effect on 14 April will impact adjusted operating profits by £5m to £10m.

The full-year dividend was confirmed at 8p per share, down 33%.

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Issue Date: 26 Feb 2020