William Hill cuts cash burn as punters discover delights of table tennis during coronavirus pandemic
William Hill PLC (LON:WMH) said betting revenue has more than halved since the widespread shutdown of sports due to the coronavirus pandemic, though online sports betting declined less than expected as customers found alternative sports to bet on such as table tennis.
The bookmaker said its cash burn has been reduced to roughly £15mln per month currently and it has liquidity of at least £700mln, with its banks now also waiving their covenant restrictions for this year and loosened next year.
Some optimism has been gained from the recent restarting of horse racing in France and in the UK next month and with professional football, which accounts for roughly half of online UK sportsbook, starting in Germany this weekend behind closed doors.
For the 10 weeks to March 10, 2020, before the sports shutdown, total net revenue was down 5%, with online down 6%, bookmakers shops up 17% and the contribution from the US business up 26%.
From March 11 to April 28, total net revenue fell 57%, with online down only 21% but retail down 85% and the US down 90%. Sports wagers were down 70% and gaming revenue was down 33%.
The FTSE 250-listed group said its actions to mitigate the effects of coronavirus on the business means it is performing ahead of the initial scenario of £100mln-£110mln underlying losses, which included most sports remaining cancelled until the autumn.
Having warned that each month of closures for its shops would result in a £25mln-£30mln profit hit, William Hill said this is now nearer £12mln-£15mln thanks to government support for furloughed workers.
Shares in the company pinged 9% higher on Friday morning to 117p, though they are still down 40% so far this year.
Broker Peel Hunt said the bookmaker has “more than adequate liquidity” and the important new news was the agreement of a covenant waiver in relation to the bank facility this year and a reset for 2021.
“A key plank of our valuation is the US business where the process of opening more states to sports betting continues, and it appears that Eldorado, William Hill’s US partner, will continue with its acquisition of Caesars, which should give William Hill access to more states and casinos in the future,” the analysts said.
Emilie Stevens at Hargreaves Lansdown said: “Football and horse racing are responsible for most of the group’s online sports book and while increased gaming revenues have plugged some of the gap, they’ve been missed.
“William Hill’s planning for retail shops to open in some way in the second half of the year too. But this is of course dependant on the UK keeping ‘R’ [the coronavirus reproduction rate] down and lockdown restrictions easing.”
–Adds share price and broker comment–