Market watch: Bet on better outlook for bookies

Published on Saturday 13 February 2010 12:40

MORE benign recent trading in the gaming sector has raised hopes of a better outlook from under-pressure bookmaker Ladbrokes when it announces its full-year results on Thursday.

The firm issued a profits warning in October – with a 58 per cent tumble in its operating surplus for the third quarter after it suffered a barren start to the English Premier League football season.

Analysts expect group operating profit for the year to be a little above the 170 million mark, which would represent a fall of about 30 per cent.

The third quarter saw a winning start to the season by Chelsea and Manchester United and the low incidence of draws – the bookies' favourite result. Poor margins in horse racing and the weak economic environment also affected the company's profitability, while Ladbrokes turned to investors to raise 275m to reduce its debt position.

Investec analyst Matthew Gerard said a run of favourable sporting results – particularly football – that have boosted its rivals in recent trading will also help Ladbrokes.

"Clearly the industry benefited from something of a reversal in the fourth quarter, and Ladbrokes shares enjoyed a recovery as William Hill delivered its upbeat pre-close update in January," he said. "However, on balance, we believe finals are more likely to be tinged with disappointment."

The annual results will be the last from Ladbrokes chief executive Chris Bell, who is set to step down in the summer.

Recession-hit Holiday Inn firm InterContinental Hotels is expected to post a steep profits slide in its full-year results on Tuesday, while current trading may continue to be tough.

Analysts forecast the company, which also operates hotels under the Crowne Plaza and Staybridge Suites brands, will report operating profits of between $335m (214.3m) and $385m for last year compared with $549m in 2008.

The firm's outlook for the year is expected to garner most attention as onlookers watch for signs of improvement in demand and prices for the under pressure sector.

Numis Securities said the firm was "relatively resilient" in a very difficult year for the hotel industry.