The Week Ahead: Dollar costs Diageo dear as the Guinness issue comes to a head

It's not just love in the air this week. Besides the flowers and chocolates being delivered for Valentine's Day, City workers will be kept busy with a number of heavyweight corporates stepping up to post their results.

It's not just love in the air this week. Besides the flowers and chocolates being delivered for Valentine's Day, City workers will be kept busy with a number of heavyweight corporates stepping up to post their results.

One of the companies reporting is drinks giant Diageo, owner of Guinness as well as Baileys and Smirnoff, among others. The sector has been in the news following a flurry of actual and potential deals, and Diageo was one of the first to get the rumour mill going after it agreed a joint venture with Heineken to brew Guinness in St Petersburg. Market chatter has long pondered what Diageo will eventually do with Guinness - stout does not sit easily with its other spirit and wine brands - and so the Heineken deal was seen as significant.

Questions will no doubt be asked about this at the interim results. As for the numbers, analysts are expecting pre-tax profits to dip from £1.3bn to £1.27bn, largely because of the weak dollar. American spirits volumes are likely to be resilient, with a more subdued performance in Europe and Asia.

Also reporting is BHP Billiton, the world's biggest mining company. Like rival Rio Tinto, BHP is expected to benefit from the surging commodity prices and to unveil a record set of numbers. Analysts predict profits before tax and exceptional costs to surge to $3.89bn (£2.08bn) from $2.18bn. And just as Rio Tinto announced plans to return cash to shareholders, so BHP investors will be looking for a windfall. Last August saw the group detail a programme to buy back $2bn of stock, and analysts are hoping this will be extended.

Also looking for a windfall are mmO ₂ shareholders, who meet tomorrow to approve the mobile phone company's plans to pay its first dividend.

Elsewhere, and Standard Chartered is the latest bank to unveil full-year numbers. Few surprises are expected, with the focus as usual on the Asia specialist's forecast for overseas markets and any further details on the recently announced $3.3bn acquisition of Korea First Bank.

Kingfisher had its own reasons for celebrating Ellen MacArthur's round-the-world voyage, and who can blame it? The retailer's B&Q brand sponsored the yachtswoman's boat and so was splashed across newspapers everywhere. No doubt reference will be made to the deal on Thursday, when the group updates on trading, but the real focus will be on sales - and the news is likely to be considerably less buoyant. Most believe Kingfisher will have suffered from the spending slowdown and reveal stagnant underlying sales growth with, somewhat ironically, B&Q hit the hardest.

Media is represented with full-year numbers and a trading update from news and information group Reuters and Anglo-Dutch publisher Reed Elsevier respectively. At Reed, the weak dollar will have hit home, but it will be the outlook for the coming months, particularly regarding any signs of recovery in the science publishing arm, in which investors will be most interested.

As for Reuters, its recent update on first-quarter trading beat market expectations, so the outlook for the current year should be reasonably positive. As for the 2004 data, pre-tax profits are likely to have improved from £190m to £263m. The disposal of Instinet, Reuters' majority-owned electronic brokerage arm, will also garner attention as shareholders are hoping for any cash to be returned.

Investors in the transport sector, meanwhile, will hear from two ends of the spectrum: breakdown services group RAC and Go-Ahead, operator of the Thameslink and Southern commuter lines. There, the focus will be on the company's bid for the Integrated Kent Franchise and on its bus arm, which has suffered from lower growth in London and a weak performance in the North-east.

There are also some heavyweight economic announcements due. Federal Reserve chairman Alan Greenspan makes his biannual monetary policy testimony to the Senate Banking Committee, a key indication of the state of the economy. Most are expecting an upbeat assessment but with a caveat about the risk to inflation from rising import prices. In which case, the current trend of tightening interest rates would have further to run.

Back home, and the Bank of England publishes its quarterly inflation report, which will also be scrutinised for hints on future rate movements. Other announcements include inflation data for January, unemployment figures, the Royal Institution of Chartered Surveyors' house price survey and retail sales.

As for overseas companies, one of the more interesting to update the market should be Altadis, the Spanish cigarette group that was recently rumoured to be interested in the UK's Imperial Tobacco. It reports numbers on Tuesday.

CALENDAR

Tomorrow 14

UK: Results: (final) Heavitree Brewery, Internet Business Group, Prestbury Holdings, Quarto Group, Royalblue Group; (second quarter) NetStore; (third quarter) PD Ports.

Tuesday 15

UK: Results: (F) BG; (first quarter) Enodis; (3Q) Yell.

Wednesday 16

UK: Results: (F) Associated British Ports Holdings, Corac Group, CSR, RAC, Reuters Group, Standard Chartered; (I) BHP Billiton.

Thursday 17

UK: Results: (F) Reed Elsevier, Zetex; (I) Diageo.

Friday 18

UK: Results: (I) Go-Ahead Group, Vebnet Holdings.