Bottom Line: Labroke double

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The Independent Online
LADBROKE Group romped in with a historic double yesterday - its first press conference and a cut in the dividend. But investors will have to wait some time before the company clinches the treble with sustained recovery.

Underlying profits of pounds 117m pre- tax in 1993 and the possibility of pounds 150m this year are figures far removed from the peak pounds 302m seen in 1989.

Ladbroke has its work cut out on two fronts - the Marie Celeste-style occupancy levels in its European and Japanese hotels and the Texas Homecare do-it-yourself business, which has fallen into disrepair.

The Ladbroke management of old prospered on the back of hotel acquisitions and retail openings. This must be replaced by one prepared to refocus radically some of its prime businesses.

A start has already been made at Texas. A 25 per cent cut in product lines to 30,000 is planned as is a reduction in the number of suppliers.

But the hard task of persuading customers to come in and buy has yet to begin. It is unlikely that a rewarding retailing formula will be in place before next year.

The hotel problem is also unlikely to be resolved quickly. It is, to a large extent, beyond Ladbroke's control.

Against that, the picture for hotels in the UK, US and elsewhere is brightening. The cash-generative betting side is also recovering.

These factors are fully reflected in Ladbroke's shares which, at 199p down 10p, trade on a pricey prospective multiple of 24. Investors might do better by following Peter George, chief executive, who took advantage of William Hill's odds of 16/1 on Ladbroke winning the lottery.

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