The Week Ahead: Deutsche offers more reasons to avoid Morrisons

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The Independent Online

Last week, the German broker told investors not to expect "good news on trading or current conditions" from Morrisons. In fact, it worries that yet more profits downgrades might be required in the wake of the first-half results. The group is forecast to report a pre-tax loss before exceptional items of between £50m and £150m. However, Deutsche predicts an even worse outcome: "We believe there is a risk to this guidance range given inflationary pressures on the group's already bloated cost base."

As important as the actual numbers will be the reasons Morrisons gives for the dramatic decline in its profitability, and the extent to which it can start to give more detailed forecasts about future earnings. Analysts hope for greater clarity from the group than in the past, especially after the appointment of Richard Pennycook as finance director.

TODAY: A solid trading statement is expected from the music group EMI. Albums by Coldplay and Gorillaz are said to be selling well, while digital sales are believed to be increasingly rapidly. However, investor sentiment towards EMI is not anxiety free at the moment.

Recent music industry indicators have pointed towards a possible slowdown in the group's US market. Also there is some worry that EMI might be losing market share. Comments from Universal a few weeks ago seemed to hint it was winning share from rivals including EMI.

Results: Full year - None. Interims - Bizspace; Harvey Nash; MSB International; Superscape. Trading statements - EMI.

TOMORROW: ARM Holdings saw its shares tumble in July when the chip designer warned that its full-year results would not live up to hopes. Problems at its Artisan division were largely to blame.

Analysts expect a slight improvement at this business but not enough to lift the group's profits significantly. For the third quarter, ARM should deliver pre-tax profits of about £13.5m, little changed on the figure it notched up this time last year.

It is widely known thatSage is doing well in the US. Recent results from Intuit, its American rival in the accounting software arena, strongly hint at this. Dresdner Kleinwort Wasserstein also believes Sage is faring well in Europe, and the broker predicts the group's trading statement will confirm this.

It expects business in the UK and France to have been particularly robust and, ina note to clients last week, Dresdner said: "We maintain our positive stance on Sage heading into the trading update. Sage has delivered solid revenue growth and an impressive operational performance in the first half of 2005. Given the relatively benign trading environment, we expect this momentum to have been sustained during the second half of the group's year."

Investors will be keen to hear how Bellway has weathered the slowdown in the UK housing market when the group unveils its full-year figures. Analysts hope the Newcastle-based housebuilder will deliver an 8 per cent rise in pre-tax profits, to a record £220m. The group is usually a favourite of investors looking for exposure to the sector because of its presence across the UK. Unlike some, it is not overly dependent on areas such as London and the South-east.

Things seem to be going well at Mouchel Parkman. The support-services specialist is the product of a merger in 2003, and ever since the combined entity has enjoyed a doubling of its shares. In July, it boasted that its order book had reached £1bn after contract wins from Yorkshire Water and United Utilities. The City expects annual results from Mouchel Parkman to show a 13 per cent rise in profits to £26.7m.

Results: Full year - Accuma; Mouchel Parkman; Bellway. Interims - Lidco; ARM Holdings. Trading statements - Sage; Diageo.

WEDNESDAY: Results: Full year - None. Interims - CHE Group.

THURSDAY: Philip Green is expected to unveil another subdued set of results from his retail empire. Last week he reported a 3 per cent fall in annual like-for-like sales at his Bhs department stores and a 5.8 per cent drop in operating profits, which stopped him from paying himself a dividend.

This week, a similar performance is expected from his Arcadia business which is up againstsubdued consumer spending and a resurgent Marks & Spencer.

This time last year, the Green family received a £460m dividend from Arcadia, which owns Topshop and Miss Selfridge. They are unlikely to receive such a windfall this time around.

Results: Full year - Freeport; Arcadia. Interims - Colt Telecom; William Morrison.

FRIDAY: Results: None expected.

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