SOURCE: Reuters

(London, England) — British bookmaker Ladbrokes Plc (LAD.L: Quote, Profile , Research) posted an 84 percent rise in four-month profit thanks to big-betting telephone gamblers, but concerns about weak UK trading knocked its shares 9 percent to two-year lows.

By 1030 GMT Ladbrokes shares were down 9.5 percent at 343-1/2 pence, as Deutsche Bank cut its target price to 530p from 565p and JP Morgan slashed 2008 earnings forecast by around 8 percent. Both cited the weak UK performance.

"Despite some healthy cost cutting in this (UK retail) business in H2 ... it is inescapable that there must be some pressure on the underlying horseracing business," Deutsche said in a research note.

Ladbrokes said profit for the four months ended Oct. 31 rose 84 percent, as its High Rollers' Telephone gambling more than offset a below target performance in the UK Retail business.

It said excluding High Rollers and the cost of a television advertising campaign, profit fell 12 percent in the period.

Total gross win, the gain on customers' betting, rose 33 percent in the four months to the end of October, while UK Retail gross win lagged, with a 4 percent gain due to record horse race cancellations in July and unfavourable results in football betting.

The group, however, said the underperforming UK Retail business turned stronger in November and its costs were "more than under control".

"Early trading in November has seen the continuation of High Rollers' Telephone activity and, encouragingly, reached into double-digit year-on-year growth in UK Retail gross win," it said in a statement.

Chief Executive Christopher Bell told Reuters trading in November has been "encouraging" and UK Retail gross win showed "early double digit growth".

"It's (UK Retail trading) a little bit better than prior weeks of August and September ... Football results had gone back to what we would call averages," Bell said.

"We had predicted our cost increase (in UK Retail) will be 12 percent, but it came in at 8.5 percent. It's more than under control -- we are doing better than we had expected and the market had expected."

Elsewhere, Ladbrokes, which has shops in Ireland and Belgium, said it acquired 17 shops in Italy and they were trading satisfactorily.

The group is moving into Italy, Spain and China to tap into markets where regulations are set to be relaxed, as it faces tougher trading in a maturing British market, with the recently introduced smoking ban also likely to cause difficulty.