The Week Ahead: Analyst wheys up Dairy Crest profits
Monday 23 September 2013
Feeling peckish? Or a bit parched? Well your appetite might be sated today with updates from fizzy-drinks firm AG Barr, cheese to milkshake company Dairy Crest and cake maker Finsbury Food. Peel Hunt’s Charles Hall smacked his lips at Dairy Crest’s cheese operations when he visited it recently which he says gave him “insight into the £40m investment in whey and the cheese operations”.
He thinks profits from whey could provide material upside to group earnings and he expects to hear more about that today at the company’s investor day. Mr Hall increased his target price to 600p “to reflect the opportunity in whey” ahead of today’s update. But Charles Pick at Numis is less keen because he is concerned about margins, tough trading and Dairy Crests’s debt levels that will rise with investment.
Results/Updates: AG Barr, Aberdeen Asset Management, Dairy Crest, Finsbury Food, Haynes Publishing.
The gold price shot up again last week but not enough to make a difference to pawn brokers like Albemarle & Bond which will report tomorrow. It issued a profit warning in April and analysts expect the company will have come under further pressure. Numis’s Andrew Wade thinks it is “suffering from a fundamental shift in the supply/demand equilibrium across the industry” because of too many shops, fewer items of gold in circulation and less purchases as well as a fall in the gold price since its height. It is likely the full-year profit could be around £8.8m, but Mr Wade is concerned that for the full year 2014 it could end up just breaking even which would “leave the business little headroom on its net debt covenants”.
Results/Updates: Augean, Albemarle & Bond, Close Brothers, Cupid, CVS, Dolphin Capital, Euromoney Institutional Investor, Hargreaves Services, Netcall, ReThink.
From food to pawn brokers and now to fake tan and soap. PZ Cussons – owner of St Tropez and Imperial Leather – will update on trading, and although it is still experiencing problems in Africa that may flare up again, analysts expect it to report continued profit improvement. Analysts also expect good things from its acquisition of baby-food brand Rafferty’s Garden. In addition, the brand has been investing in its beauty division such as its Sanctuary Spa products, advertised by dancer Darcey Bussell.
Results/Updates: Acta, Animalcare, Avingtrans, Clinigen, Daily Mail & General Trust, Havelock Europa, Instem, Iofina, Nationwide Accident Repair Services, Origin Enterprises, PZ Cussons, S&U.
Time for a bit of holiday planning on Thursday. Both Thomson owner Tui Travel and Thomas Cook will produce trading updates with most analysts expecting them to meet forecasts. Things haven’t run smoothly for either of the groups as civil unrest in Turkey and Egypt have been concerns. Analysts at Jefferies and Panmure Gordon both prefer Thomas Cook over Tui because Tui has “less self-help opportunities”. They think Thomas Cook is making headway on its cost-cutting plan. Consensus forecasts for Thomas Cook’s earnings for 2013 are £560m while Tui’s is around £544m.
Results/Updates: Compass, Faroe Petroleum, Inditherm, Indigovision, Tui Travel, Thomas Cook.
The end of the week is pretty quiet with just a handful of companies reporting. Brokerage Icap unveils a trading update on Friday and there are rumours that a fine is coming this week after an investigation into its alleged role in the Libor-rigging scandal by US and British regulators. Whether or not that happens, analysts will pour over the company’s trading update. It recently reported August electronic figures which were somewhat below the May, June and July’s growth rates. However, analysts expect Icap’s update to be broadly in line with expectations. Analysts at Bank of America Merrill Lynch think that the broker will be hit by changes in legislation which are to be introduced next month. Alterations in US rules on swap-execution facilities, due to come into effect on 2 October, will have a wider scope than first expected which will create risks for Icap, Bank of America says.
Results/Updates: Harvey Nash, Filtronic, Icap, Produce Investments.
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