The Week Ahead: Make or break for Euronext in Stock Exchange bidding war
Sunday 30 October 2005
One broadcast that won't be short of an audience this week will be BSkyB's first-quarter results on Friday. Traditionally, attention is focused on increases in the satellite broadcaster's subscriber base, but this time it will be on the decision to shell out £211m on broadband supplier Easynet, and the £1bn raised recently from a bond issue.
Analysts are therefore keen to hear the broadcaster flesh out its future strategy, especially for Easynet, which should enable BSkyB to offer better video-on-demand services. On the same day, BSkyB faces a shareholder revolt at its AGM over plans to buy in up to 5 per cent of its shares. Investors worry that this will increase the influence of 37 per cent shareholder News Corporation, which is run by Rupert Murdoch, father of BSkyB's chief executive, James.
Another company investing heavily is BAA, now two-thirds of the way through construction of the new £4.2bn terminal at Heathrow. Though strike action on the site looms for the new year, analysts will hear that work is ahead of schedule and on budget when the airports operator reports half-year results this week. BAA's financial performance is expected to be strong and analysts will want to see if revenues hit the upper edge of the £402m to £421m range of forecasts, despite disruption from the Gate Gourmet dispute and July's London bombings. BAA is also expected to report that its retail outlets are outperforming the high street by at least 1 per cent.
Still in transport, the City will also be watching to see just how badly the Gate Gourmet dispute affects the second-quarter results of British Airways. The cost to the airline is thought to amount to around £40m, but the City will be looking to see if that masks underlying gains. High oil prices are expected to hit revenues, too, but analysts say the airline should also report that passenger numbers have grown robustly.
Analysts expect more bad news from retail as it enters the run-up to the crucial Christmas trading period. Shares in Clinton Cards fell dramatically earlier this year when the company revealed it expected profits to fall by twice as much as forecast and there is little optimism for the company's interims. There are similar sentiments for Matalan, which has also had a difficult six months, revealing in August that sales had slid as consumers cut back on spending.
Consumer appetite for mobile phones does not appear diminished, however, and the City expects half-year results from Carphone Warehouse to be well ahead of forecasts. Indeed, profits could be as much as 35 per cent more than last year.
Still on consumer goods, Unilever, the maker of Dove soap, Lynx spray and Wall's ice cream, is expected to provide the City with a hint of good news as cost savings help to produce some growth in earnings. "The European consumer market remains depressed, although this should be more than countered by Unilever's significant exposure to fast-growing developing markets," said one analyst.
On a sour note, Tate & Lyle, publishing interims this week, has warned that profits from its sugar refineries may be down this year, but analysts will want to see how concern about obesity has improved the sales of T&L's calorie-free sweetener Sucralose.
From food to cigarettes ,and analysts expect Imperial Tobacco's full-year results to be in line with forecasts, and possibly improved on last year's growth of 7 per cent after a campaign of cutting costs.
A solid performance is anticipated from ICI, which is expected to report in third-quarter figures that paints have sold well. Analysts say, however, that they only expect significant improvements in the company's business once the oil price falls, and that isn't likely until the next financial year.
Across the Atlantic, analysts will be watching for the latest interest rate decision from the Federal Reserve. Interest in the media industry will be maintained by Time Warner after it was reported that the company is discussing the possibility of working more closely with either Microsoft or Google. The news prompted a rally in the stock, which had been falling since September. Analysts will look for further news when the media giant presents results this week.
In Germany, both Hugo Boss and Volkswagen are among the companies posting third-quarter figures but it's likely to be Adidas - in the process of taking over Reebok - and Puma giving reasons for cheer. Adidas reported second-quarter profits surging ahead in August, raising expectations that this week's third quarter would be equally good. Good things are also expected of Puma, which revised its annual growth figures up to 10 per cent in July on the back of half-year figures that also beat forecasts.
UK RESULTS: (final) Lok'nStore Group, Net b2b2; (interim) Clinton Cards, London & Boston Investments; (3Q) Bede
UK RESULTS: (F) Dickinson Legg Group, Imperial Tobacco; (I) BAA, Matalan, TTP Communications; (1Q) Surfcontrol
UK RESULTS: Armour Group, Phytopharm; (I) Theo Fennell
UK RESULTS: (F) McCarthy & Stone; (I) Alliance Pharma, Carphone Warehouse, Danka Business Systems, London Stock Exchange, Pilkington, Shanks Group, Tate & Lyle; (3Q) Millennium & Copthorne, ICI, International Power, Shire Pharmaceuticals, Unilever
UK RESULTS: (I) (Q1) BSkyB; (Q2) British Airways
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