William Hill reports Covid-19 revenue drop of 57%

William Hill has revealed total revenue dropped by more than half (57%) in the period between 11 March and 28 April amid the coronavirus pandemic.

In a new trading update, the London-listed operator confirmed UK online gambling revenue fell by 33% during the period, after a 70% drop-off in bets wagered on its sportsbook.

Online revenue fell by 21% during the period following the Covid-19 lockdown, although it increased by 6% for gaming and casino, while online sportsbook stakes dropped 56%. The operator did however report a 5% uptick for the lockdown period in its Online International business.

Hills said the decline in bets had been less than anticipated as its customers continued to wager on alternative products such as table tennis and football in emerging markets.

UK retail operations were also severely affected during the Covid-19 trading period, with retail like-for-like revenue decreasing by 85%.

Hills is looking to introduce a staged reopening of its UK retail estate in the second half of 2020 and is “carefully monitoring developments” across the US in respect of its estate there.

The group’s US retail sportsbook operations were among the hardest hit after 11 March, with total revenue plummeting 90% following the closure of US venues.

US online sportsbook operations continued in four states following the Covid-19 lockdown however, with bets being taken on several alternative markets.

Hills revealed it has accelerated its US product development throughout the lockdown period and will launch a US-facing online casino during H2.

In March, the firm said it expected an EBITDA hit of between £100m and £110m due to Covid-19, however the operator has said it is now performing ahead of this estimate thanks to ongoing mitigation activities.

William Hill CEO Ulrik Bengtsson said he was “exceptionally proud” of the way staff were handling the challenges presented by coronavirus.

“We took immediate measures to save costs, reduce cash outflow and minimise non-essential expenditure by negotiating with our suppliers, cancelling pay rises and executive bonuses and suspending the dividend,” said Bengtsson.

“We are taking care of our teams, securing as many employment opportunities as possible and we are ready to power up the business as soon as Covid-19 restrictions permit,” he added.

Regulus Partners analyst Paul Leyland said Hills is in a “very strong position” to weather the storm financially and that the UK credit card ban had not had a material impact on group deposits.

Discussing the operator’s performance figures, Leyland said revenue figures were slightly distorted due to the fact the reporting period started 12 days before the UK went into lockdown.

“While increasingly ‘digitally led’ (more thanks to regulatory interventions than anything else), WH is still at its heart (and FCF) a retail business, in our view. The extent to which WH can shift its operational improvements into the level of strategic re-engineering necessary for it to thrive rather than just survive in a post-Covid world remains to be seen – but it is almost certainly a bigger challenge than anything the beleaguered group has faced yet,” Leyland added.

Total online revenue for the 10-week period to 10 March increased by 16%, with US revenue up 30% and Online international revenue up 35%.

Peel Hunt analyst Ivor Jones reiterated his Buy rating for the London-listed operator.

“William Hill has agreed covenant waivers,” said Jones. “This leaves the group with abundant liquidity to trade through Covid-19 while still investing in tech development.

“Trading in lockdown has been better than guided, but operating socially-distanced betting shops will be a tough challenge, so we are leaving forecasts unchanged,” he added.