The Week Ahead: Broker looks for further sell-offs at Whitbread

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The Independent Online

Numis Securities believes Mr Parker needs to announce a further restructuring of Whitbread if he is going to stave off a private-equity-type bid. The broker suggests that the sale of Marriott and the reduction in Whitbread's pension deficit has removed two of the company's poison pills, making it especially vulnerable.

During the relatively short period of time he has been at the helm of the group, Mr Parker has been quite radical. First he decided to sell off the Marriott hotels chain and soon after he surprised the City with a sizeable return of cash to shareholders. He now has numerous options for further reforms. However, Numis reckons the sale or significant restructuring of a division is the bare minimum required to fight off predators.

As far as Whitbread's figures are concerned, analysts expect the group to post a slight drop in first-half pre-tax profits to about £124m from £128m last year.

TODAY: Results: Full year - Egdon Resources; Scott Tod. Interims - Alterian; Hitachi Capital.

TOMORROW: Results: Full year - None. Interims - BP; Reckitt Benckiser; Westbury; Whitbread.

WEDNESDAY: Egg should unveil an improvement in third-quarter profits but the numbers will be overshadowed by a statement from Prudential, its majority shareholder, about the future of its 79 per cent stake in the internet bank. Recent reports have suggested Prudential's new chief executive Mark Tucker plans to hold on to Egg. This has led to talk that such a decision could leave the insurer's balance sheet starved of capital.

However, Credit Suisse First Boston is not convinced by this argument. "We do not believe that the group needs to sell Egg in the near term to finance growth and if Prudential were to commit to retaining the company this would not preclude a later disposal at the right price," the Swiss broker said recently. CSFB does not expect the internet bank to be a drain on Prudential's finances, nor does it expect the insurer to buy out minority shareholders.

The City expects Egg to unveil an operating profit for the three months to 30 September of £19m, up from £13m for the same period in 2004.

Results: Full year - None. Interims - Egg; European Motor Holdings.

THURSDAY: In the wake of Boots' interim results, its management team can expect to be further quizzed about the merits of the healthcare retailer's planned merger with Alliance UniChem. The deal, announced on 3 October, came as a shock to many in the Square Mile and left a good number of investors unconvinced by the logic behind the move despite a roadshow by the chief executive Richard Baker and the chairman Sir Nigel Rudd.

Since the merger was unveiled, Boots secured a better-than-expected price for its over-the-counter medicines business. It sold the division to Reckitt Benckiser for £1.9bn. In terms of Boots' interim earnings, the group should deliver a pre-tax profit of between £140m and £160m, compared with £146m last time.

AstraZeneca and GlaxoSmithKline, the UK's two biggest drug companies, will unveil third-quarter figures. Both statements should please investors and reveal solid profits growth. Williams de Broe hopes to see AstraZeneca post a 41 per cent jump in pre-tax profits thanks to strong sales of its ulcer treatment Nexium and schizophrenia treatment Seroquel. The broker expects GSK to deliver a more modest 14 per cent rise in profits. Williams de Broe points out that GSK's first-half figures were held back by manufacturing problems at its plant in Puerto Rico. It says the group's third-quarter results will be largely free from his distortion.

Smith & Nephew should report an 8 per cent rise in third-quarter profits to £64m. The medical devices group disappointed the market last month when it cut its full-year profit forecasts, blaming the disruption caused by Hurricane Katrina to southern US hospitals and the launch of new products by rivals. S&N hopes to combat the latter by launching its own new products such as a less invasive artificial hip implant and devices for younger adults.

Results: Full year - Interregnum. Interims - Amvescap; AstraZeneca; Blacks Leisure; Boots; BAT; GlaxoSmithKline; Maelor; Maiden; Royal Dutch Shell; Smith & Nephew.

FRIDAY: Results: Full year - None. Interims - Anglo Asian Mining; LHM.

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