William Hill Online profits down 12% on UK tax pressure and sportsbook fall
UK tax increases dent digital operating profit while online pro forma net revenues fall 2% on a double-digit decline from sports betting
William Hill Online today reported a 12% year-on-year fall in H1 2019 operating profit following an increase in UK taxes and a 2% fall in digital net revenue to £367.3m.
The London-listed bookmaker this morning revealed adjusted operating profit was down 12% to £54.3m due to the increase of Remote Gaming Duty (RGD) to 21% from 1 April and a 10% reduction in sportsbook revenue.
Sports revenue (£152.4m) was impacted by a 5% fall in amounts wagered during the six-month period and a weaker sportsbook margin of 8%. In the UK, revenue from sports betting was down 11%.
Online gaming was the bright spot for William Hill in H1 with net revenue up 5% YoY on a pro forma basis to £214.9m.
Hills hailed the impact of its Mr Green acquisition on the company’s international diversification, with the proportion of Online revenues derived from outside of the UK increasing to 33%.
On a statutory basis, online net revenue was up 14% year-on-year in H1 with a 37% increase in gaming revenue offsetting a 7% fall in sportsbook revenue.
CEO Philip Bowcock hailed the operator’s international diversification following its Mr Green acquisition
“We are making good progress against the five-year strategy we outlined last year, delivering strong revenue growth in the US and other international markets and positioning William Hill well for future growth,” William Hill CEO Philip Bowcock said.
He added: “Online International revenues have grown strongly, up 66%, with the acquisition of Mr Green. We are becoming more diversified with non-UK markets now contributing a third of Online’s revenues, up from just 24% last year. In the UK, performance has improved through the half, up 7% in Q2, as we manage the tax and regulatory impacts.”
Bowcock also highlighted the growth of the operator’s business in the US, where it claims to have a 27% market share across all states ahead of the rollout of its new proprietary technology platform.
Its existing US business reported a 16% YoY increase in amounts wagered on a local currency basis, although net revenue was down 2% after gross win margin fell from 7.7% to 6.5%.
William Hill’s total group revenue in the half-year period was £811.7m, while adjusted operating profit was down significantly to £76.2m due to the recent reduction in FOBT stake limits and investment in the US.
The operator’s share price was up 7% to 157p on the London Stock Exchange at the time of writing.