The Week Ahead: Babcock shares are soaring, but will it be a deal or no deal?

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The Independent Online

Will the dog bark? When Babcock International unveils annual results on Wednesday, the answer looks to be: not likely. Since BAE Systems and VT Group acknowledged last month that they were mulling making an offer for the company, its shares are up more than 24 per cent.

But analysts don't expect its chief executive, Peter Rogers, to say a word about the possible deal. Rather, he will be eager to trumpet what is expected to be a strong year at the ship-building and services group. Michael Donnelly of Bridgewell Securities predicts pre-tax profit of £40.5m, up from £35m the year before. "They are a company in play. They won't say anything [about the takeover]," Mr Donnelly said.

For easyJet, things are expected to get worse. In the maiden interim results for its new chief executive, Andy Harrison, on Wednesday, Charles Stanley is predicting a £45m loss for the six months ending in March, partly due to the Easter holiday falling outside the period, but also to higher fuel costs that have added an estimated £55m to the carrier's costs.

Royal Dutch Shell, on the other hand, is set to outdo its first- quarter profits last year as it continues to benefit from sky-high oil prices. Shareholders will pay special attention to what the company says about its dividend and share buyback programme. Shell has a lot of cash on its books, and investors will be looking for an indication of what the company plans to do with it, other than giving more back to them. Brokers Williams de Broë expects a pre-tax profit of $5.7bn (£3.1bn) for the quarter, up from $5.3bn the year before. The other area of interest will be the company's outlook for production after it raised its capital expenditures projections last quarter. Problems in Nigeria are expected to hinder production, though to what extent is unclear.

Another company with a growing cash pile on its hands is BG Group, which will give its quarterly numbers on Wednesday. "Guidance on its cash generation will be quite interesting because it is producing more cash than its capital commitments," said Phil Corbett of Numis Securities. "How long can it afford to run with the balance sheet like that?"

BG had pledged to spend £1bn on buying back shares, but it has reduced its activity in recent months as its share price has climbed. Its liquefied natural gas unit, meanwhile, helped by the activation of a couple of projects in Egypt and the high price of gas, is adding cash to the books.

Investors in ice-cream-to-deodorant group Unilever will be hoping that the company follows the lead of Switzerland's Nestlé, which recently reported a big jump in first-quarter sales. The company is coming off its best quarter for five years, and the hope is that it will continue, helped along by improving sales of diet drink Slimfast. ICI is wrestling with a £1.5bn pension deficit and rising input costs, but looks set to unveil continued progress of its turnaround in its quarterly results on Thursday.

The tussle for control of BAA continues this week with updates from both the owner of Heathrow and its pursuer, Spanish services giant Ferrovial. BAA will publish its defence against the hostile £8.75bn bid but few are expecting any shocks, with the group instead likely to focus on why it feels the 810p-a-share offer undervalues the business. As for Ferrovial, it is set to produce a buoyant set of first-quarter figures - Santander is predicting a 29 per cent rise in sales on the previous year, to €2.3bn (£1.6bn).

The big question for South African miner Lonmin on Thursday will be labour, or more specifically, the cost thereof. Sixty per cent of the company's costs go to pay its workers, and management has been trying to mechanise more of its mining processes to reduce its costs. It wasn't helped earlier this month when its largest smelter broke down, bringing production to a halt for 11 days. The extent of that stall will be of great interest to analysts, as will the company's outlook for the price of the metal palladium, which is used in catalytic converters for cars, industrial production and jewellery. Williams de Broë expects $315m in interim pre-tax profits.

A week after Imperial Tobacco reported a 14 per cent increase in its first-half sales, British American Tobacco hopes to make a similarly upbeat showing. Charles Stanley expects pre-tax profit for the first three months of the year to come in at £671m, up 9 per cent from the same period the year before on sales in new markets such as Egypt and Turkey.

CALENDAR

Tomorrow 1

UK RESULTS: Bank Holiday

Tuesday 2

UK RESULTS: : (final) Epic Reconstruction, Eureka Mining; (interim) Aberdeen Asset Management, CSR, Formation

Wednesday 3

UK RESULTS: (F) Babcock International, Matalan; (I) easyJet, Tomkins, BG Group, British Sky Broadcasting, British American Tobacco, Numis, Surfcontrol

Thursday 4

UK RESULTS: (F) Blacks Leisure, iTrain; (I) Imperial Chemical Industries, Lonmin, Royal Dutch Shell, Sanderson

Friday 5

UK RESULTS: (F) Body Shop International, NWD

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