The Week Ahead: Still a lot of irons in the fire at Corus

Click to follow
The Independent Online

With the interim reporting season now over, the City might well be thinking it can take things easy for the next few weeks as the news flow ebbs. But it would be wrong to assume there will be nothing for investors to focus on. Indeed, as the global economic recovery continues to gather pace and equity markets around the world push ahead, any news, be it corporate or economic, will be seized on for evidence that these better times are here to stay.

One company rocked by the tough economic conditions of recent years has been steelmaker Corus. It reports interim results on Wednesday and analysts are pencilling in a reduction in bottom-line losses. The UK operating performance will have improved since Port Talbot's main blaster furnace, destroyed by an explosion 14 months ago, was rebuilt in January, while an increase in average selling prices is likely to help the Dutch figures. On a financial level, the pressure has been eased in the short term with a new €1.2bn (£835m) banking facility.

Yet Corus is not out of the woods: it still needs to find £250m to fund restructuring plans. The group is locked in talks with bankers - a rights issue has been widely touted - and it is likely to provide an update on this at the results. Investors will also be looking for some insight into its future strategy as well as a progress report on the proposed sale of its US business.

Another sector that has suffered at the hands of the downturn has been aerospace, and market leader Smiths will provide a snapshot of current conditions when it reports its full-year figures on Wednesday. Civil aerospace is expected to remain weak as, global economic recovery or not, tourism and travel are still subdued to say the least. Working in Smiths' favour will be its defence business, which is likely to help offset such problems. Expect a solid rather than stunning set of figures: sales are forecast to be flat at around £3.06bn, while earnings before interest and tax are likely to be only marginally higher at £423m.

Also in the pipeline are results from building materials specialist Wolseley, the world's biggest plumbing business, which will post full-year figures on Tuesday. It is set to be a fairly disappointing affair. Although the housebuilding boom has continued unabated, Wolseley's performance has been dented by the dollar's weakness (around 60 per cent of sales come from the US) and depressed lumber prices. Sales are expected to be higher, with most analysts predicting that they will nudge past the £8bn mark. Yet profits are expected to be up only marginally, on an operating basis, and they could dip below last year's level at the bottom line.

Forming a direct contrast will be housebuilder Barratt Developments, the UK's largest by completions. Its interim pre-tax profits are likely to be a hefty 23 per cent higher at £270m. Like most in the sector, Barratt has benefited as homeowners flock to estate agents and take advantage of record low interest rates. Analysts are hoping the strong conditions will continue for a while longer and will be looking for an excuse to raise their forecasts this week.

One area to have performed well despite the economic slump has been the high street, and on Thursday, Swedish retail giant Hennes & Mauritz reports third-quarter figures. Pre-tax profits are expected to be up a respectable 13 per cent, but the focus will be on underlying sales in the US and whether the group is still on track to break even in the country this year. There is also a risk that H&M could have fallen foul of the mixed consumer demand in the hot summer, as some of its peers already have.

Back home, there are trading updates from newspaper publisher Daily Mail and General Trust, magazine and radio group Emap and consumer goods giant Unilever. The first two will be watched for further news of an advertising upturn, and Unilever will attract attention because it shocked the City earlier this year with below-forecast sales growth. Sugar group Tate & Lyle also provides an update on trading, while shareholders in Royal & SunAlliance meet tomorrow to vote on the insurer's plans to launch a deeply discounted rights issue, much to the chagrin of the City.

Also exciting attention will be Opec and the oil cartel's Wednesday meeting in Vienna. Yet there is likely to be little news. There have already been broad hints that Opec, which pumps a third of the world's oil, will probably leave output quotas unchanged for the remainder of 2003 as Iraq struggles to rebuild itself after the war. It helps that prices have, by and large, stayed within the desired range of between $22 and $28.