Shares in bookmaker William Hill (WMH) gained almost 5% to 123p despite reporting a plunge in profit and scrapping its interim dividend after taking a big hit from the shutdown of sport.
The market was seemingly more interested in the company’s post lockdown performance, and plans to close another 119 high street betting shops as it increasingly embraces online.
PROFIT TUMBLES
William Hill’s reported pre-tax profit for the six months through June actually rose to £141.1 million, compared to losses of £63.5 million the previous year, but this was thanks to a one-off value-added tax refund of £201.6 million.
Revenue slumped 32% to £554.4 million and adjusted pre-tax losses amounted to £14.2 million, compared with a profit of £50.8 million a year ago, with the company blaming the lack of sporting events during the early stages of the pandemic and the temporary closure of its shops.
The axing of the interim dividend was already widely expected by investors.
Shore Capital analyst Greg Johnson focused on the positives, highlighting the £12 million operating profit despite the obvious challenges in 2020. He called the performance ‘excellent’ despite plunging from last year’s £76 million.
The market was encouraged by trading since lockdown reules started to ease, with online net revenues ahead by 16% (12% UK and 23% international) and UK retail like-for-like net revenue flat in the three weeks to 30 June.
William Hill said trading in July has also been positive although Johnson added that with the compression of the football calendar in the period it is arguably not a true comparative at this stage.
NET DEBT REDUCTION ‘WELCOME’
The bookmaker has also managed to cut its net debt, which for the period stood at £339.5 million and is £196.2 million lower than at the end of 2019.
AJ Bell investment director Russ Mould said that in an environment where many businesses are struggling financially, ‘a reduction in net debt is also welcome for shareholders.’
He added that William Hill’s ‘robust’ financial position should enable the company to continue its US expansion drive as it aims to take advantage of the opportunity created by the opening up of the gambling market stateside.
