|William Hill has coped robustly with a string of unfavorable results and posted a 20 per cent increase in profitability this week, an outcome the company attributes to the rise in fixed-odds betting terminals which it says now accounts for 30 per cent of profits.|
A statement said: 'Performance in the second half of 2004 has been adversely affected by less favourable horseracing results and significantly poorer results in respect of domestic and international football since the start of the current season. This trend, which is consistent with normal variations in sporting results, continued to prevail in the closing weeks of the year.'
The rise in popularity of FOBT’s, as well as Hills online casino and poker operations, however, has meant that shares in the company have doubled over the past two years. On Monday they performed better than any other FTSE stock, prompting financial analysts to recommend investment in the company. The Times business said: “Sports results go against bookmakers from time to time. Good operators like Hill, however, ensure that the odds are stacked in their favour over the long run. The increased use of predictable games machines, coupled with the rising appetite for gambling in this country, set a fair weather picture and shares, trading on a forward p/e of 12, are inexpensive. Buy.”
This is all the more remarkable when we consider the investor panic that arose when Hills chief, David Harding, sold £5.5 million of his own shares last June. Investors were reassured this was no reflection on the company and that Mr Harding needed to raise money to fund a divorce settlement. This week shares rose above the level they had attained prior to the incident.