The Week Ahead: Reuters - Good news but awkward questions

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Reuters, the financial information giant, may very well have two major points of good news to deliver at its annual general meeting on Wednesday but the event looks set to be dominated by awkward questions on corporate governance.

Reuters, the financial information giant, may very well have two major points of good news to deliver at its annual general meeting on Wednesday but the event looks set to be dominated by awkward questions on corporate governance.

The positive news that the City is hoping for would come from a first-quarter trading update and an agreement to sell the company's Instinet electronic brokerage in the US.

Reuters had given guidance that its first-quarter sales would be down 1.5 per cent. If it is significantly better than that, it will be seen as a great fillip. The company has seen revenues shrink for more than four years and the big question is when it will see positive territory again. Any pointers given by the group on this issue would attract great interest. The City is trying to work out whether growth will kick in by the end of this year or if we will have to wait longer.

On Instinet, which has been up for sale, Reuters is apparently in exclusive talks with Nasdaq, the US hi-tech stock market, to sell the business. Analysts believe it is worth about $2bn but it is unclear how Nasdaq will come up with this sort of money. Reuters should be able to confirm the Nasdaq talks or even deliver a full deal on Wednesday.

The first-quarter figures will also be accompanied by the Reuters AGM. Here investors will question why it is necessary to pay the new part-time chairman, Niall FitzGerald, a salary of £500,000 a year, when his predecessor was happy to work for much less. Also, RREV, the corporate governance body, has advised shareholders to vote against the re-election of Charles Sinclair, a non-executive director at Reuters. RREV says Mr Sinclair, the chief executive of Daily Mail & General Trust, cannot be considered independent after 11 years on the Reuters board.

Today

Results: Full-year - Peter Hambro.

Tomorrow

The housing market is under something of a dark cloud and Bellway can expect its interim results presentation to be dominated by the macro issues. Last week, its rival George Wimpey said the general election has been causing some uncertainty in the market and said it had increased incentives offered to buyers to try to keep sales rolling in.

Interest rate uncertainties are also putting off buyers and Bellway can be expected to emphasise that it serves the lower and middle end of the market which is less vulnerable to the slowdown. Bellway is expected to show an improvement on the first half of last year, with the broker Charles Stanley forecasting pre-tax profits of £77.4m this time. That would put the housebuilder on course for record full-year profits for the ninth year in a row.

Results: Full year - Highland Gold, Game Group. Interims - Assoc British Foods, Bellway, Mouchel Parkman. Q1 - ARM Holdings.

Wednesday

Results: Full-year - Clinton Cards. Interims - McCarthy & Stone. First quarter - Prudential, Reuters, Autonomy. Trading update - Royal Bank of Scotland.

Thursday

After a surprisingly strong Christmas, is WH Smith really seeing a turnaround in its core high street business? That is the question investors will want answers to when the group publishes its half-year results. The City will also look for comments on the next phase of its strategy and a report back on initiatives already undertaken. In particular, what is the evidence of sales growth? The Christmas improvement was based on margin improvement from simply not going for a big discounting strategy this time. It is expected to report pre-tax profits of some £65m for the first half.

Kate Swann, the chief executive, will again emphasise there is no quick-fix solution to Smith's problems. But investors will want to see results and future plans. ABN Amro thinks that, after focusing on stationery last year, WH Smith will turn its attention to books.

Results: Full-year - Imperial Energy. Interims - Allied Domecq, WH Smith.

Friday

WPP's first-quarter update will provide information on turnover growth and guidance on margins improvement. Although the advertising group's chief executive, Sir Martin Sorrell, has repeatedly emphasised that this year does not have the benefit of the "quadrennial events" that fell in 2004, the first quarter of 2005 will not compete against such events from 2004 so it should show pretty healthy expansion. Many in the City believe the growth estimates put out by the company so far for 2005, of 3-4 per cent revenue increase, is conservative. It will be interesting to see if Sir Martin makes any advance on that at this early stage in the year.

Economics Diary

Today: Eurozone - inflation (Mar).

Tomorrow: UK - RICS house price survey (Mar); inflation (Mar). Eurozone - industrial production (Feb). Trichet speaks in New York. Germany - ZEW survey (Apr). US - producer prices (Mar); housing starts (Mar).

Wednesday: UK - Bank of England minutes (Apr); public finances (Mar). US - inflation (Mar); Fed's beige book (Apr).

Thursday: UK - retail sales (Mar). US - weekly jobless claims (Apr 16); Greenspan testifies on Budget reform before Senate Banking Committee.

Friday: UK - GDP (Q1, first estimate). Italy - retail sales (Feb).

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