BZW downgrades Ladbroke as lottery takes toll

Shares in Ladbroke, the betting and hotels group, were hit by a profit downgrade yesterday when broker BZW said the National Lottery and the heatwave would affect profits at the group's betting division.

Rumours that the chief executive of Ladbroke's hotels subsidiary, Hilton International, is set to leave the group also affected sentiment. Tomasso Zansotto only joined the group 18 months ago but is now expected to leave the group next year.

The shares dipped 2.5p to 164.5p when BZW reduced its forecast for the full year from pounds 168m to pounds 155m. The downgrade comes ahead of Ladbroke's half-year results, which are due tomorrow.

Ladbroke has been hit by the success of the National Lottery, which has been taking as much as pounds 100m a week. However the sales of the Instant scratch card game have fallen from a high of pounds 42m and sales have been running at less than pounds 30m for the last four weeks.

The heatwave has also made the going tough for the bookmaking business. Harder racetracks have led many owners to pull their horses out of races because of fears of injury.

This reduces the size of the field and increases the chances of the favourite winning, which puts pressure on bookies' margins.

The downgrade follows an announcement by Ladbroke last month that it would cut 200 jobs in its racing division as a result of competition from the National Lottery.

Bookmaker groups such as Ladbroke and Coral are now hoping for assistance from the Government. They are expecting a cut in racing duty in the November Budget, and a relaxation in rules restricting advertising for casinos. Bookmakers are also hoping they will be allowed to introduce up to two fruit machines in each shop from next year.

Ladbroke said in May that the lottery had affected sales, which had declined by about 4 per cent in the first quarter of the year. Other bookies, such as Willliam Hill and Coral, have also reported slower sales.

Investment Column, page 18