The Week Ahead: Investors look for pubs' smoke signals

It's all go in the pubs sector this week with Enterprise Inns, Mitchells & Butlers and Wolverhampton & Dudley all due to post annual results. The major talking point for those following the industry in recent weeks has been the Government's proposed ban on smoking in pubs that prepare food by 2008. Some analysts have predicted this could result in a fall in trade of up to 8 per cent which, in turn, has prompted a retreat by many stocks in the sector.

It's all go in the pubs sector this week with Enterprise Inns, Mitchells & Butlers and Wolverhampton & Dudley all due to post annual results. The major talking point for those following the industry in recent weeks has been the Government's proposed ban on smoking in pubs that prepare food by 2008. Some analysts have predicted this could result in a fall in trade of up to 8 per cent which, in turn, has prompted a retreat by many stocks in the sector.

Enterprise Inns, however, has been among the few to shrug off such worries and its shares hit an all-time high on Friday. Enterprise will unveil full-year results tomorrow and is thought to be least affected by the ban as its estate focuses on selling beer rather than food. Brokers forecast profits to soar to about £222m from £175m last time.

On the other hand, Mitchells & Butlers, which reports on Wednesday, looks likely to be one of the hardest hit given the high level of food sales at its chains, which include high street names such as Harvester, All Bar One and O'Neills. Williams de Broe tips M&B profits to fall to £182m from £220m last year.

Friday's figures from W&D should show the benefit of strong trading at the group over the summer. Pre-tax profits are forecast to rise from £73 to £76m and shareholders are likely to enjoy a good jump in the dividend, possibly by 10 per cent to 23.3p. Analysts seem more concerned about W&D's rising costs - due to a higher minimum wage, pension contributions and subscription to Sky TV - than the proposed smoking ban.

TODAY

Results:

TOMORROW

The catering giant Compass really needs to win back investor confidence if it is to achieve a stock market rating equal to its peers. The group's final results are a great chance for it to start the rehabilitation process. "Hopefully, reassurance on Compass's earnings growth outlook and cash generation will be forthcoming," said Andrew Darke, an analyst at Williams de Broe, last week.

Compass's September profit warning indicated its profits would be little changed on the £661m it achieved last year. The market will be very keen to see how cash flows are doing at the group. In the year just gone, the Williams de Broe analyst expects Compass to have generated free cash flow of £317m, about £100m less than in 2003. He hopes this will rise to £377m next year.

Results: Full year - Arla Foods; Compass Group; Connaught; Enterprise Inns; Intec Telecom; Richmond Foods; Topps Tiles. Interims - Warner Estate; Patientline; Kingston Communications; Homeserve.

WEDNESDAY

The partial offer for De Vere from the corporate raider Guinness Peat has now lapsed and the market has endorsed the chief executive Karl Lever's plan to grow earnings and improve returns at the hotels group. But analysts believe investors need to be patient.

Improving De Vere's poor returns profile is the key management task. To this end, it intends to sell poorer performing hotels and to focus on driving margins at the remaining units. The roll-out of the group's Village Hotels chain is expected to continue. Shareholders can expect De Vere to post a 10 per cent jump in full-year profits to £44m.

Results: Full year - De Vere; Mitchells & Butlers; Sage; Shaftesbury. Interims - WS Atkins; Chapelthorpe; Expro International; Oasis Healthcare; Wagon.

THURSDAY

Trading conditions during the second half of Daily Mail & General Trust's year are likely to have been little changed on the first half. The media group indicated recently all was going to plan across its national and regional newspaper empire. But some in the City worry that national display advertising has shown signs of slowing. In terms of the pure financials, DM&G should post a full-year pre-tax profit of £230m, up from £174m previously. If FKI's recent share price performance is anything to go by, first-half results from the engineer will not disappoint. Not so long ago, the group assured investors they need not worry about the sharp rise in steel prices hitting its profits. Analysts at the stockbroker Gerrard forecast FKI pre-tax profits to rise to £33m from £31m last time.

Results: Full year - Avon Rubber; Daily Mail & General; Holidaybreak; OMG. Interims - De La Rue; Findel; Reliance Security; Vp; Xansa; FKI.

FRIDAY

Results: Full year - Wolverhampton & Dudley Breweries. Interims - Park Group.