The Week Ahead: Corus tipped to shine on strong steel demand

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The Independent Online

The Anglo-Dutch steel maker Corus Group has enjoyed a monumental reversal of fortunes in the past three years after a period when it looked like the group could go into receivership.

The shares have also been boosted by consolidation prospects after Mittal Steel moved for its French rival Arcelor in April, with Russian steel giant Severstal thought to be on the verge of launching a bid for Corus. But a bid for what was once British Steel from a Russian group controlled by an oligarch might not be palatable to the City and a tie-up with the German rival ThyssenKrupp is also a possibility.

Taking out sector consolidation, Corus continues to confound the critics by remaining profitable despite its high cost base. The group recently sold its aluminium downstream operations to the US group Aleris for €696m (£469m), which will be used to strengthen the balance sheet and further invest in carbon steel operations.

Investors will expect a bullish outlook statement tomorrow, based on strong global steel demand and price rises for the remainder of 2006, but raw material and energy costs continue to be a source of some concern to the company, especially in its UK business. The broker Credit Suisse is looking for first-half operating profits of £306m.

TODAY: The strike at BHP Billiton's Escondida mine in Chile has been a boon to Antofagasta, sending the copper price higher in the futures markets. The group completed the acquisition of Equatorial Mining last week, and anything other than blockbuster results will see the shares hammered. However, that is highly unlikely. Broker Canaccord Adams expects pre-tax profits of $581m (£306m), towards the top end of expectations.

Results: First half - 1st Dental Laboratories; Antofagasta; Bunzl; Pilat Media Global; Quantica.

TOMORROW: The first half of the year has been grim for the print advertising industry, and Johnston Press is not alone in having warned the market about weak sales. Investors will be hoping for some positive news on the second half and the expected recovery in 2007, but more bad news would not surprise anyone. Analysts are looking for pre-tax profits of £75m.

Opinions are divided on last week's £882m acquisition of DM-Data by LogicaCMG, with one analyst saying DM-Data are "doing cartwheels" over the price. First-half results should show pre-tax profits of £90m.

Computer distributor Morse has already told the market it will report a loss for the first half of the year. Rival Fayrewood warned for the second time this year last week, so there will be a few nervous investors, who are hoping that the second half of the year will make up for first half losses.

Results: First half - Ark Therapeutics; Beazley Group; Corus Group; Cyprotex; Filtrona; GTL Resources; Homestyle Group; IQE; James Fisher & Sons; Johnston Press; LogicaCMG; Molins; Morse; Signet Group; SMC Group.

THURSDAY: The 1999 merger of Guinness and Grand Metropolitan produced a food and drink powerhouse, but Diageo shares have been something of a let-down. The world's largest alcoholic drinks maker should report full year pre-tax profits just north of £2bn as expected and give the market a positive outlook statement.

There has been a bit of takeover talk at Amec in recent weeks, with private equity and infrastructure players thought to be looking at the project management and building services group. Consensus forecasts are for first half pre-tax profits of slightly above £50m.

Coffeeheaven, the only Polish company listed in London, is trading close to an all-time high at 26p, but, with coffee futures spiking in London over the past month, could offer a downbeat assessment of the second half of the year.

Results: Full year - Diageo. First half - Amec; Avis Europe; Axis-Shield; BBA Group; Churchill China; Coffeeheaven International; Hunting Group; Serco; Wellington Underwriting.

FRIDAY: News in July that the controversial Home Information Packs would be voluntary was a body blow to Rightmove, the online estate agency. Much of its business model and revenue forecasts were based on providing services linked to the packs, and how the group plans to compensate for this huge dent in its business model will overshadow the first-half figures. Consensus forecasts are for pre-tax profits of £9.7m for the full year, but with wildly varying expectations some traders expect the group's still rich valuation to be questioned more severely.

Ian Burke presents the first set of numbers for Rank Group since he took the top job in March to oversee a period of restructuring for the casino and restaurant group. Investors will expect more news on the potential sale of the Hard Rock café chain, and with sources indicating a number of interested bidders the news could be good.

Results: First half - Rank Group; Rightmove.