The Week Ahead: Tesco expected to ring up £2bn profit

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The Independent Online

Annual results from Tesco tomorrow will see profits at the supermarket giant break through the £2bn level, making it the first UK retailer to achieve such a feat. Analysts expect Tesco to deliver pre-tax profits of £2.05bn, up from £1.66bn a year earlier.

Despite the consumer slowdown in the UK, the group should still deliver impressive like-for-like sales growth. Dresdner Kleinwort Wasserstein expects Tesco to report like-for-like sales growth of 8 per cent for the fourth quarter.

The international division sales growth will be even more impressive. Most forecast it to boast double-digit revenue growth, although profits at this part of the business are likely to have been affected by adverse exchange-rate movements.

Another stellar performance can also be expected from Tesco's personal finance business. The supermarket group is likely to have generated income of about £130m from its joint venture with Royal Bank of Scotland, which is a 30 per cent rise on the previous year.

Today: Investors should not be deceived by the fact Pipex Communications is a penny stock. It is actually a big business, with a market capitalisation of £160m, and has become so through a series of acquisitions. The internet service provider to telecoms carrier is expected to post full-year profits of £5.9m, compared with a loss of £8.2m last time. By this time next year this should have risen to £12m.

Cost savings are a key factor in the Pipex story. At its interim results in September, the company indicated that it had identified savings of up to £5m to be realised in 2005 and 2006; investors will be hoping for evidence that Pipex is on track to achieve these.

Results: Full year - Independent Media; M&C Saatchi; Pipex Communications. Interims - None.

Tomorrow: Arbuthnot Securities is expecting an encouraging set of interims from Fibernet. It hopes the results will show evidence of narrowing losses, and indicates that the telecoms carrier is on its way to becoming cash-flow positive. For the first half, the broker expects Fibernet to announce a loss of £2.1m, compared with a deficit of £3.9m for the same period last year. Arbuthnot is convinced the group is well-placed to take advantage of any increase in corporate spending on telecoms services as it is a compelling alternative to the likes of BT.

The past year has been one of significant progress for Invu and final results from the document management group should reflect that. It is tipped to post a maiden profit of about £300,000 for the year to January 2005. And things are expected to get even better for Invu in the year ahead, with software releases tipped to provide good momentum across the company.

Results: Full year - Invu; BNB Resources; Tesco. Interims - Fibernet; Lok'nStore.

Wednesday: If predictions from Investec Securities are anything to go by, full-year results from JJB Sports will impress. The broker believes the figures will come in above City forecasts, and will herald a return to like-for-like sales growth at the sports retailer. The problems of last year mean that JJB's profits will be down about 30 per cent to £62m, but Investec seems certain that the company is on the mend now that the clearance of prior season's stock is complete and store standards vastly improved.

In addition, the broker saysthe company is taking a more aggressive stance on pricing. "There is huge headroom to claw back lost profits in the year ahead," Investec says.

Meanwhile, there has been a massive step up in the roll-out of JJB's health clubs. Eighteen will open this year, almost doubling the total at the start of the year. The main boost to profits from this will come next year when the roll-out should add £13m at the pre-tax level. Finally, Investec is unconvinced by the much-mooted theory that JJB's chairman, David Whelan, whose family controls more than 30 per cent of the group, may try to take the retailer private. "We do not believe Mr Whelan is of a mind to either take the company private or sell out to an external bidder," the broker says.

Results: Full year - JJB Sports; Premier Research. Interims - Careforce.

Thursday: Results: Full year - Austin Reed; Clinical Computing; Forbidden Technology; TripleArc. Interims - Clearstream.

Friday: Results: Full year - Emerald Energy; Ukbetting. Interims - None.

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