The Week Ahead: BAA needs good results to fight off Ferrovial bid

Click to follow
The Independent Online

The countdown is on in the bid battle for BAA so investors will be looking for good results from the airports operator tomorrow if it is to stand a chance of fighting off the £8.8bn hostile bid led by the Spanish construction group Ferrovial. Any financial weakness will bolster BAA's suitors' chances of persuading shareholders that their best bet is to back the unsolicited takeover offer.

With so many big banking names involved in the takeover battle, consensus forecasts were not available because hardly any of the big brokerages are publishing forecasts. Goldman Sachs, although not involved in the Ferrovial consortium, submitted an informal offer of 870p per share that was also rejected by BAA, and Citigroup is acting as sole advisor to the bidders.

The broker Charles Stanley has pencilled in pre-tax profits of £650m for BAA but adds that the company will need to bolster its defences against the bid by giving more details on how it intends to deliver growth for shareholders. The analyst Tony Shepherd, on the other hand, thinks the company may decide to "keep its powder dry" in case of a higher offer from the Ferrovial consortium or in case another group enters the bidding.

TODAY: The education software provider RM Group gave the market an encouraging pre-close statement at the end of March, so there should be no nasty surprises in today's first-half numbers. The company has already said, unusually for a pre-interim results statement, that it expects to hit full-year targets, even though virtually all of the group's profits come from trading in the second half of the year. Analysts are expecting about £1.5m of first-half pre-tax profit.

Results: Full year - Robert Wiseman Dairies; Torotrak. First half - RM Group.

TOMORROW: VT Group has had an unusually high profile in recent weeks, thanks to the aborted bid for its rival Babcock along with BAE Systems. Aside from the Babcock bid, recent newsflow has been good. The group has won a big contract from Greenwich Council for school regeneration, worth £450m over 20 years, and moved into fleet management via the £87m acquisition of four vehicle fleet businesses from Aviva. Consensus forecasts are for £56m of pre-tax profits but given the good news traders will not be surprised if forecasts are beaten.

The last few years have brought little joy for shareholders of Compass Group, the world's largest contract caterer. Corporate activity in the sector has given the shares a lift, and the good price achieved in the auction of the motorway service station subsidiary SSP proves the demand for assets. But general trading conditions remain under pressure. The broker Williams de Broë has pencilled in pre-tax profits of £220m for the first six months of this year.

Shares in InterContinental Hotels have almost trebled from a low of 350p in March 2003. There has been talk of private equity interest in the group, and analysts will be expecting a bullish update along with first half pre-tax profits of about £148m.

Results: Full year - BAA; Big Yellow Group; Bizspace; VT Group. First half - Compass Group; Enterprise Inns; ScS Upholstery; Slimma. First quarter - InterContinental Hotels; Schroders.

WEDNESDAY: After last week's announcement by Hammerson that it will convert to Real Estate Investment Trust status, investors will be looking for more of the same from Land Securities, the UK's largest landlord. With London property prices rising again, analysts expect to see a sharp increase in net asset value per share, with consensus forecasts of 1,853p per share and pre-tax profits of £417m.

Results: Full year - Firstgroup; iomart Group; J Sainsbury; Land Securities; Mice Group; Rensburg Sheppard. First half - De Vere Group; Holidaybreak; Jessops.

THURSDAY: Exposure to emerging markets has given SABMiller growth rates its rival brewers can only dream of, and has made the stock the best performer in its sector over the past three years by a wide margin. Africa, Asia and Latin America should continue to drive growth for SABMiller, with China a particularly strong market. Analysts expect more good news along with full-year numbers, with Williams de Broë looking for pre-tax profits of $2.5bn.

BT Group faces an increasingly competitive market for home broadband services, with Carphone Warehouse introducing free broadband and BSkyB expected to launch its own assault on the home broadband market later in the year. Underlying pre-tax profits for last year are expected to come in at around £2.2bn.

Results: Full year - Aveva Group; BETonSPORTS; Boots; BT; Investec; National Grid; Oakdene Homes; Phoenix IT; SABMiller. First half - Enodis; Euromoney.

FRIDAY: Results: Full year - British Airways. First half - Hardys & Hansons.