William Hill buoyed by earnings upgrade thanks to revenue surge

Marion Dakers
High Street bookmaker William Hill looked attractive to punters yesterday, as shares closed up more than three per cent following a bullish trading statement.

Earnings for the year are expected to be at the top end of predictions, with gross earnings of around £250m due to a four per cent increase in revenue.

The company reported its win margin for the year has returned to a normal level of between 17 and 18 per cent, recovering from the low number of draw games in the last Premier League season that meant more winning bets.

Collins Stewart repeated its “buy” rating, saying in a research note: “Win margins have normalised, demonstrating underlying resilience in the model and substantially mitigating fears that 2010 will be structurally tough for retail.”

Analysts warned that match and race cancellations due to the recent weather meant a difficult start to this year, though the company’s online betting site saw a near hundred-fold spike in gamblers betting from home during the snow.

Wyn Ellis, an analyst at Numis Securities, increased his projection for 2010 earnings by four per cent to £280m, but added: “We perceive long term structural challenges as horse racing continues to decline and the challenge of the internet mounts.”

Earnings for William Hill Online, a joint venture with Playtech set up in October 2008, were up around 35 per cent for the year after a strong performance in the fourth quarter.
The company also announced yesterday that chairman Charles Scott would leave at the end of 2010, after 11 years on the board.

Shares in the bookmaker ended yesterday up 6.3p at 192p on the London Stock Exchange.