The Week Ahead: Cutbacks hurting construction plans



Building roads, railways and regenerating the UK is supposed to be an important part of getting the economy on track. Government has been trying to boost growth, but construction group Morgan Sindall has actually been hit by cutbacks from government in the shape of reducing the pipeline of affordable housing and some other infrastructure projects. Despite areas of its business remaining sluggish, Morgan’s half-year results are expected to be reasonable today. Investors will be keen to hear what impact new finance director Steve Crummett will have made. Oriel Securities scribblers think Mr Crummett’s appointment was a “positive move” but point out that with a new group FD, “one can never rule out a move to a different approach to recognising revenues”. They think the shares have already had a strong run and they predict pre-tax profits will be down 24 per cent to £15.4m although they expect the dividend to be unchanged. They rate it a hold but raised their target price to 639p ahead of the results today.

Results/Updates: Alent, GW Pharamceuticals, Heritage Oil, HSBC, Morgan Sindall, Ultra Electronics.


Are we not gobbling up enough pasties and pies at Greggs? Analysts at Espirito Santo think that although Greggs “is a well-run business” and has done well to control the profit and loss account “under sales pressure” Greggs “will struggle to maintain margins in a persistent negative [comparable] sales environment”. They expect  the costs of refurbishing stores will hurt the business in the short term, so they recommend selling the shares for now. Oriel Securities is also a seller and reminds investors that April’s profit warning demonstrated how tough it is finding it. Oriel predicts a pre-tax profit of £12.4m – a 25 per cent decrease on the same time a year ago.

Results/Updates: BBA Aviation, T Clarke, Dragon Oil, eSure, Fresnillo, Greggs, Hill & Smith, InterContinental Hotels, Legal & General, Meggitt, Pendragon, Rotork, SABMiller, SDL, Share, Standard Chartered, Zotefoams, 888 Holdings.


With plenty of beautiful sunshine in the UK there have been fears that holiday makers have stayed put. Analysts have previously warned that Easyjet could be hit by a fall in last-minute bookings. On Wednesday, it will be the holiday group Tui Travel’s turn to update the market on its third-quarter trading. Simon French at Panmure Gordon wonders if its fourth quarter could be hit by “discounting in the latest market” due to the hot weather. But the Thomson-owners’ third quarter results are expected to follow rival Thomas Cook, which last week reported a strong set of figures. Mr French predicts a £11m profit improvement for Tui’s second half and Numis forecasts it will “see an improvement in reported profits with the weakness of sterling being of some benefit”.

Results/Updates: Cyprotex, Eurasian Natural Resources, Ferrexpo, Novae, Old Mutual, Randgold Resources, Quintain Estates, Tui Travel, United Drug.


The posh estate agent Savills is expected to report a rather good quarter and analysts may raise their forecasts for full-year pre-tax profits from their current  £64m. The first half is expected to have benefited from the continued housing boom and rising prices in central London.

Results/Updates: Amec, Aquarius Platinum, Aviva, Avocet Mining, Bellway, Cobham, Enterprise Inns, Grainger, Henderson, Kerry, Ladbrokes, Mondi, Pennon Puricore, Rio Tinto, Schroders, Standard Life, Spirax-Sarco, Savills.


The insurer Catlin will be feeling the pain from a round of international disasters including Oklahoma tornados and floods in Canada and Central Europe. It was also involved in insuring the Costa Concordia cruise ship that sank. Scribblers at Numis think its half-year results will show its premium income has risen due to international business, but expectations are running high following strong results from its rival Hiscox. Numis thinks Catlin’s interims will read as “disappointing in this context”. They think it has vulnerable earnings and low margins and rate it a hold with a 540p price target.

Results/Updates: Catlin.

Economics Diary


Purchasing Managers’ Index.


British Retail Consortium like-for-like sales, Industrial production, Manufacturing production, GDP estimate, New car registrations, UK 10-year Bond Auction.


Bank of England inflation report.


ECB Monthly Bulletin, US  Unemployment claims.


Construction output, trade balance.


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