The Week Ahead: Cairn pumps up the profits to join the FTSE's high rollers

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The Independent Online

This week it's all about change. Summer is put to bed with a stream of results, the Bank of England convenes for the latest decision on interest rates, and the FTSE holds its quarterly reshuffle.

This week it's all about change. Summer is put to bed with a stream of results, the Bank of England convenes for the latest decision on interest rates, and the FTSE holds its quarterly reshuffle.

Based on Friday's closing prices, asset manager Schroders is set to fall out of the FTSE 100 index, with Cairn Energy dropping the "minnow" tag to take its place.

The market cannot get enough of Cairn, which also reports interim numbers this week. Key oil discoveries have bolstered its value, and the shares have put on a staggering 268 per cent this year. The final decision will be based on Tuesday's closing prices.

At the Bank of England, the Monetary Policy Committee announces its decision at lunchtime on Thursday. While change is always a possibility, with the cost of borrowing now up five times since November and the housing market slowing, most believe rates will stay at 4.75 per cent.

As for corporate results, there is a diverse range but one of the most keenly watched will be BAE Systems, the UK's largest arms manufacturer. There will be two key issues at the interim presentation. The first surrounds one of BAE's most important deals, the Al-Yamamah contract to supply Saudi Arabia with planes and weaponry. Payment is linked to the price of oil, and with crude breaking records, speculation is growing that there might be a cash build-up on the balance sheet. The market cannot agree on this, however, so clarification will be sought.

The other issue is the future of the company's shipyards. BAE is reviewing this, and analysts are keen for a decision. They are likely to be disappointed, however - the review is thought to be still ongoing. Further disappointment will come for those hoping to meet the new chairman, Dick Olver. He will not attend because, according to BAE, he is still concentrating on strategy. Pre-tax profits are expected to come in £37m higher at £370m.

Representing the media sector is ITV. In its pre-close trading statement, the broadcaster said net advertising revenue was up 4.9 per cent. Helped in part by Euro 2004, the figure was in line with market forecasts. At the interims, analysts will want news on market share and current trading.

The deadline for bids for US advertising firm Grey Global occurs on Wednesday. Bids are likely to be around £600m; WPP, Havas and Hellman Friedman are all contenders.

The sin stocks are led by tobacco group Gallaher, among others. Pre-tax profits are expected to rise, but only just, from £241m to £249m. Analysts have concerns about tough trading in some of Gallaher's European markets, where tax increases and a rise in cross-border shopping are taking their toll.

At bookmakers William Hill, pre-tax profits are expected to improve from £86m to around £116m, helped by the popularity of fixed odds betting terminals (or gaming machines) and roaring online trade. The hope now is that William Hill will treat investors through share buybacks and increased dividends, while also keeping an eye out for bolt-on acquisitions.

Brewing giants Heineken and Belgian Interbrew are both reporting, but some of the biggest news on mainland Europe will be from the disgraced diary giant Parmalat, which posts interim results. Trading details will not be a surprise; sales in the first seven months of 2004 slumped 7.4 per cent as it sought to sell off a host of assets. The disposal programme is intended to return the group to profit.

Parmalat became Italy's biggest bankruptcy last December after it emerged that a €3.9bn (£2.6bn) bank account did not exist. Interested parties will want to hear how the sell-off is progressing and get an update on the various legal rows Parmalat is embroiled in.

Back home, and another sector in the spotlight is travel, with rail and bus business Arriva publishing results, and easyJet and Heathrow owner BAA updating on traffic data.

In retail, electronics chain Dixons is updating on trading, and Woolworths puts out interim numbers. At the latter, underlying sales for the first 24 weeks were up 0.9 per cent across the main chain, and analysts are not expecting much deviation at this stage. The biggest issue instead remains prospects for Christmas - yes, already it's on people's minds.

CALENDAR

Tomorrow 6

UK: Results: (interim) Abbot, Adventis, Amlin, Bond International Software, Bovis Home, British Polythene Industries, British Vita, Corporate Services, Forth Ports, IMI, Intertek, Just Car Clinics, Roxboro, Stadium, Star Energy, Taylor Nelson Sofres, Vitec, William Hill, WSP.

Tuesday 7

UK: Results: (final) Dechra Pharmaceuticals, Hays, Linx Printing Technologies, PZ Cussons, Surfcontrol, Thorntons, Whittard of Chelsea; (I) Aegis, Antofagasta, Axon, Brit Insurance, Brixton, Cairn Energy, Chime Communications, Computacenter, Davis Service, Dmatek, DRS Data & Research Services, Evolution, Incisive Media, iTouch, John Menzies, John Wood, Lavendon, Meggitt, Mersey Docks & Harbour, nCipher, Psion, Robert Walters, SDL, Wellington Underwriting.

Wednesday 8

UK: Results: (F) A&J Mucklow, Alumasc, Sygen International, Teesland; (I) Aquilo, Beazley, Belgravium Technologies, Benfield, Carillion, Derwent Valley, Gallaher, Interserve, IP2IPO, James Beattie, Newport Networks, Paladin Resources, Pipex Communications, SIG, T&F Informa, Travis Perkins, UK Coal, Umbro, Urbium, Woolworths, Yule Catto; (third quarter) Cambridge Antibody Technology.

Thursday 9

UK: Results: (F) Galliford Try, McBride, Vebnet Holdings; (I) Arriva, BAE Systems, Easynet, InterContinental Hotels, ITV, Kidde, Mowlem, MTL Instruments, Oystertec, Rathbone Brothers, SHL, SMG, Spirax-Sarco Engineering, Venture Production; (second quarter) Premier Farnell.

Friday 10

UK: Results: (I) Aga Foodservices, Charter, Communisis, Delta, Johnson Service, KBC Advanced Technologies, Oakdene Homes, Premier Foods, Retail Decisions.

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