Concerns over possible military action in Iran, the world's fourth largest producer, have sent oil to more than $73 per barrel for the first time since the late 1970s and the oil majors, BP included, are expected to beat the bumper profits reported in 2005. Outrage among politicians and consumers over blockbuster profits and executive pay packages are not likely to make any dent in the industry, at least not in the short term.
According to broker Williams de Broë, BP's first quarter numbers due tomorrow are likely to show weaker global refining and marketing margins in comparison the last quarter of 2005. However, with the Texas City refinery back to full capacity after the fatal explosion last March the outlook should remain very positive and Richard Griffiths, the broker's oil analyst, reckons that share buy-backs could hit $20bn in 2006, 8 per cent of the current market capitalisation. With the oil price unlikely to fall sharply, there is every chance that analysts will have to raise full-year forecasts.
TODAY: Autonomy, once among the darlings of the dot com boom, reports first quarter numbers today and analysts will be keen to see the contribution of Verity, the data search company bought by Autonomy for $500m in December last year. Consensus analyst forecasts are for revenue of $56m and pre-tax profits of $9m.
Results: Full year - Aricom; Harvey Nash; Peter Hambro Mining; Sterling Energy; Vanco. First half - Lok'n Store Group. First quarter - Autonomy.
TOMORROW: Expect to see full year pre-tax profits of about £2.2bn from Tesco, the UK's largest food retailer. Analysts will perhaps be keener to hear about the company's plans for its real estate portfolio, which it may convert into a Real Estate Investment Trust in order to crystallise its value. However Panmure Gordon is not holding its breath on a REIT announcement today and instead believes the group could return to the progressive dividend policy it abandoned three years ago. Panmure does not expect to see any nasty shocks or a major change in Tesco's leading position.
Game Group, the video console and game retailer, will have its fingers firmly crossed that Sony can supply the PlayStation 3 in time for Christmas. But Altium Securities, the broker, thinks that is unlikely and despite the successful launch of "Tomb Raider: Legend", the latest in the series of successful computer games, it maintains its "sell" rating on the stock. Pre-tax profits are expected to come in at between £8m and £10m.
Results: Full year - Forbidden Technology; Game Group; Premier Research; Rugby Estates; Synchronica; Tesco; Ukrproduct Group; Venture Production; Whitbread Group. First half - IDMoS; McCarthy & Stone; Mouchel Parkman; Offshore Hydrocarbons. First quarter - BP.
WEDNESDAY: There has been little in the way of good news in the last year for Reuters' shareholders, with the stock languishing at 395p, well short of its 2006 high of 460p. Newsflow since a dire preliminary trading statement in February has been non-existent, but Williams de Broe gives the shares a fair value of 463p and a "buy" rating. The broker is looking for first quarter revenues of £623m and a resumption of positive news.
Results: Full year - Alexandra; Atrium Underwriting; CI Traders; European Motor Holdings; Metal-Tech. First half - Carr's Milling Industries. First quarter - Imperial Tobacco; Reuters Group.
THURSDAY: A big day for the pharmaceutical sector as the UK's two largest players report first-quarter numbers. Little excitement is expected from GlaxoSmithKline, with progress in its pipeline widely anticipated along with steady if unspectacular sales growth from its current portfolio. Analysts expect pre-tax profits in the region of £1.8bn to £2bn. AstraZeneca might be more interesting, with a strong start to the year for sales of Nexium and Crestor, two blockbuster drugs. However, generic competition is cause for concern as is the pipeline of new drugs, creating a potentially mixed bag of news. Consensus forecasts are for pre-tax profits of just over £1bn.
Numis Securities thinks Colt Telecom is one to avoid. The company is in the process of raising £300m of new equity and delisting from the US, but Numis is not expecting to hear good news of the company's operating prospects. Numis expects to see pre-tax earnings of £3m.
Results: Clinton Cards; SMC Group. First quarter - Reckitt Benkiser. First half - Character Group. First quarter - AstraZeneca; Colt Telecom; GlaxoSmithKline; Shire Group; Smith & Nephew.
- More about:
- Investment Banks
- Richard Griffiths
- Stock And Equity Market And Stock Exchange