The Business Matrix: Tuesday 26 April 2011

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BP

BP is expected to reveal a drop in underlying first-quarter profits on Wednesday as it continues to feel the impact of the Deepwater Horizon spill a year ago. Analysts expect BP to report a 0.8 per cent decline in profits to $5.6bn (£3.4bn). Production levels, have fallen by 9 per cent since it sold oil fields and refineries and the US banned further drilling in the Gulf.

Whitbread

Whitbread is expected to unveil a 20 per cent rise in annual profits on Thursday, thanks to a strong performance at Premier Inns and Costa Coffee. It would represent a strong recovery for the firm, whose profits slumped as consumers cut discretionary spending. The City will be watching for signs that falling consumer spending has affected momentum.

Shell

Shell’s first-quarter trading update on Thursday is expected to make pleasanter reading than BP for investors, with analysts expecting the oil giant to post a 20 per cent rise in profits to $5.8bn as it benefits from the rising cost of oil and gas and a cost-saving drive. However, its production has also been hit by the US Gulf moratorium, and maintenance work.

AB Foods

Analysts predict Associated British Foods will report further profits growth, despite a slowdown at its budget fashion chain Primark, when it provides half-year results on Wednesday. Back in February, it was one of a raft of retailers to report a change in mood among UK shoppers since the start of the year as VAT, high inflation and Government cuts hit confidence.

BSkyB

The Satellite broadcaster BSkyB is expected to reveal further growth in customer numbers and profits on Thursday, heaping more pressure on News Corp’s bid to take full control of the company. The Culture Secretary has already said he is minded to allow the Murdoch takeover, despite worries over media plurality, and a ruling is expected this week.

Game

Game is set to reveal that profits have more than halved after being hit by the squeeze in consumer spending and cut-price competition when it reports full-year results on Friday. The company, which runs 641 Game and Gamestation stores in the UK and Ireland, is forecast to post profits of £38m for the year to 31 January, down from £90m the year before.

Russia reaches out to other Brics

Ship-building company Russian Financial Corporation (RFC) has outlined ambitious plans to modernise the river transport systems in several countries as part of its expansion strategy. The chairman of the Moscow-based group, Andrey Kiselev, said it had approached governments including Vietnam, Indonesia, Colombia and Brazil, and discussions with India “have moved quite along the way”.

Bankers dodging bonus rules

The Centre for Economic and Business Research says banks are by-passing new restrictions on bonuses by increasing bankers’ basic pay. It estimates that average regular pay for City workers in the first quarter of 2011 is some 7 per cent higher than a year ago and much higher than growth of just over 2 per cent for the UK as awhole – lower bonuses “have not put an end to the culture of high remuneration in the City”.

Big firms to gain from African chaos

The travel chaos caused by the recent political revolutions in North Africa will boost big package holiday operators against their independent rivals in the long run, according to Nicholas Batram, a leisure analyst at Peel Hunt. He says the way in which they responded to the unrest would enhance their reputations. “These major companies are benefiting from scale and reputation.”

Hedge funds also bet on natural gas

Hedge funds increased bets on natural gas for the sixth time in seven weeks as a drop in US nuclear power output to the lowest in more than four years raised speculation that utilities will boost gas-fired electricity generation. The funds and other large speculators increased wagers on rising prices by 34 percent in the week to 19 April, said the Commodity Futures Trading Commission.

Big Mac Index proves low yuan

China’s yuan and the Hong Kong dollar are the most undervalued currencies in the world, trading at discounts of 40 per cent or more versus the greenback, based on the relative cost of Big Mac hamburgers, according to The Economist’s Big Mac Index. China’s discount stands at 41 per cent and Hong Kong’s is at 49 per cent.

Precious metals hit new highs

Silver and gold climbed to records, oil rose for a fourth day and Asian stocks fell amid concern accelerating inflation will undermine the region’s economic recovery. The yen weakened against all its main counterparts. Gold climbed for a ninth day, while crude oil also increased in trading in Asian markets.

Draghi in the lead in race for ECB job

President Nicolas Sarkozy is backing the governor of the Italian central bank, Mario Draghi, as the leading candidate to succeed Jean-Claude Trichet at the helm of the European Central Bank, a source familiar with the matter has told Bloomberg. The French leader may make his views public this week.

Lloyds may sell Scottish Widows

Lloyds banking Group is reported to be considering a sale of its pensions and insurance business Scottish Widows. Possible buyers include the UK insurance company Resolution Group, which owns Friends Provident, the British life arm of the French insurer AXA, and Bupa’s health assurance division.

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