William Hill on track to meet expectations

British bookmaker William Hill put rival Ladbrokes in the shade today after its betting shop business weathered a run of punter-friendly football results.

Shares rose 11% as William Hill said its retail division remained on track to meet full-year expectations, helped by reduced costs and higher-than-forecast turnover as successful customers recycled more of their winnings.

In contrast, Ladbrokes saw shares fall this month after it reported a 58% drop in quarterly profits and announced plans for a rights issue.

Analysts described William Hill's third quarter update as encouraging, even though a recent improvement in sporting results came too late to prevent its online division from missing targets.

A barren run of football results impacted the industry at the start of the season, reflecting the low incidence of draws and high number of wins recorded by favourites such as Chelsea and Manchester United.

William Hill said the amount left by losing punters fell by 21% in the three months to September 29 but that retail revenues were only down by an improved 4% as a result of strong demand and greater recycling of customer winnings.

In addition, William Hill said margins had returned to more normal levels in the latter part of September and early October.

A strong performance from gaming machines also eased the pressure on the retail division's gross win, which was 11% lower overall in the third quarter.

And despite the margin pressure, William Hill said its online arm continued to make good progress with revenues up 56% in the third quarter.

Chief executive Ralph Topping said: "Business volumes both in our shops and online since the beginning of the football season in mid-August have been good with strong turnover in our online sportsbook and encouraging levels of recycling in retail."

The company has more than 2,300 betting offices in the UK and Ireland, while its online arm provides sports betting, casino games, poker and bingo.

Numis Securities said the update was encouraging relative to the "disappointing" trading update from Ladbrokes.

Analyst Wyn Ellis added: "We are trimming our full-year projection for profits from £193.8m (€212.07m) to £187.3m (€204.96m), reflecting weakness in online sportsbook margins, but elsewhere we believe that performance is better than might have been feared and bears very favourable comparison to Ladbrokes.

"William Hill is doing much better in machines whilst weakness in the over-the-counter margin has been offset by excellent cost control."