The Week Ahead: Centrica's 22% hike angers customers and investors alike

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The Independent Online

Energy bills, banks and beer will headline a busy earnings week in the city.

Centrica outdid both Scottish Power and British Gas last week by announcing the sector's biggest price hike yet. But the 22 per cent increase in customer bills from 1 March hasn't sent the investment community into universal delirium. When Centrica publishes its annual earnings on Thursday, analysts will want to know why it has gone further than rivals in charging more for its gas.

"It's unclear what it means," said an analyst. "Is it because they are being aggressive in moving their profit line up, or is it because their cost line is going up?" The company may also give a hint on who will replace Sir Roy Gardner as chief executive, and guidance on the undying rumours that everyone from Gazprom to E.ON to EDF may be sniffing around the company.

The company timed the dropping of the price-hike bombshell well, as it came the day after EU Competition Commissioner Neelie Kroes accused European gas suppliers of abusing their control of the market to drive up prices artificially. Dresdner Kleinwort Wasserstein predicts pre-tax profits of £1.4bn.

British Energy, which in November announced that its nuclear output would be lower than expected due to unexpected "equipment issues", will reveal to what extent those outages affected its bottom line when it unveils interim results Friday.

British banks are expected to make a strong showing, as two of the sector's reference companies unveil annual earnings. Charles Stanley expects Barclays to announce final pre-tax profits of £5.2bn, with strong growth in particular at its investment banking unit, Barclays Capital, and fund management division, Barclays Global Investors.

The improving fortunes of fund management businesses are also expected to be at the centre of strong numbers from Lloyds TSB. A drive for increased efficiency and wider margins at its Scottish Widows life business are likely to contribute to an annual pre-tax profit of £3.3bn, says Charles Stanley. Investors will also be looking for a clear stance from the company on the recurring bid speculation that has kept the shares buoyant.

Bucking the trend, fund manager Schroders is expected to report a drop in profits as it has been unable to stem the flow of clients who have left after the company lost a key manager.

Reuters hopes to be a bearer of good news on Thursday when the news agency publishes its annual results, just a week after rival Thomson beat estimates and increased its dividend.

Full-year results are due this Tuesday from confectionery giant Cadbury Schweppes. Pre-tax profits should rise, to £960m from £886m, and like-for-like sales are expected to meet the company's expectations and rise by between 4 to 6 per cent.

But there are a couple of other issues likely to interest investors. The first concerns soaring sugar prices. Cadburys buys most of its sugar from the US and Europe, which are regulated markets and so not susceptible to swings in world prices. But it also buys from non-regulated markets, such as Australia, which are vulnerable.Prices in America are also straining upwards following Hurricane Katrina.

The other issue is takeover speculation. Nestlé has been touted as a potential bidder - but traders quickly pooh-poohed last week's rumours. As Investec analyst David Lang put it: "Cadbury Schweppes is a Catch-22 takeover target laced with a poison pill. It would require a megalomaniac of the first [order]."

Takeover rumours will provide the backdrop for several other earnings announcements. Mining giant Anglo American is expected to post huge gains over last year's numbers as commodities continue to sizzle. With the cash rolling in, the company's name bubbled to the surface as a possible buyer for platinum miner Lonmin. However, the bidder appears to be South Africa's Gold Fields. Hilton, meanwhile, which is selling its US business and has received an approach for its Ladbrokes betting arm from CVC, publishes its annual results on Tuesday.

Scottish & Newcastle, brewer of John Smith's and Courage beers, hopes to follow the lead set by fellow brewer Diageo last week, when the brewer of Guiness turned in better-than-expected results. Rumours, once again, that S&N may tie up with Danish brewer Carlsberg, its partner in the Baltic Beverage joint venture, gave the former's shares a lift.

On Thursday, BAE Systems will show why it's good to be in the war business. The company is set to unveil a year of solid growth fuelled by headline-making deals such as Saudi Arabia's decision in December to arm its air force with the Eurofighter Typhoon jet, which is made by BAE. Harry Philips of Williams de Broë estimates £931m in pre-tax profits. The company may also shed some light on its interpretation of the Pentagon's recently released Quadrennial Defense Review, which outlines the views of the world's biggest military buyer and what its future spending patterns might be.

Vermin eradicator Rentokil Initial, which announced earlier this month that it would sell its manned security business, is hoping to turn in better numbers than it did at its last results outing, when it revealed a 21 per cent drop in quarterly pre-tax profit. The company is reviewing several of its business lines as chief executive Doug Flynn tries to reverse the negative profit trend.


Tomorrow 20

UK RESULTS: (final) CRC, EQ; (interim) Ekay, Quadnetics, WH Ireland

Tuesday 21

UK RESULTS: (F) Barclays, Cadbury Schweppes, George Wimpey, Millennium & Copthorne, Schroders. Scottish & Newcastle; (I) Avanti Screenmedia, Macro 4, Thorntons

Wednesday 22

UK RESULTS: (F) Anglo American, Associated British Ports, Croda International, MicroEmissive Displays, Morgan Crucible, Morgan Sindall, Plusnet, Rexam, SDL; (I) Compel, Sportingbet

Thursday 23

UK RESULTS: (F) BAE Systems, Capita Group, Centrica, Colt Telecom, Hanson, Hilton, IBS Opensystems, London Capital, Rentokil Initial, Reuters, Shire, Spirent, Spring, Tomkins; (I) Brambles Industries, Galliford Try, Invensys, Sareum, Synairgen

Friday 24

UK RESULTS: (F) Davis Service, Lloyds TSB, WPP, nCipher; (I) British Energy, Davenham, Lincat