The Week Ahead: Three cheers for Glaxo. We'll all need a tonic if rates go up

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The Independent Online

It will be another week in which the world's biggest money-spinners - oil companies, drugmakers and miners - get to show just how good they are at generating mountains of cash.

GlaxoSmithKline, the UK's largest drugmaker, will unveil its annual numbers on Thursday, and they will be very good indeed. Broker Charles Stanley expects the company to report £7.8bn in pre-tax profit for the year, which is well ahead of the £6.7bn it earned the year before. Yet there will be no shortage of questions for Glaxo's chief executive, Jean-Paul Garnier. Chief among investors' concerns will be whether the company will follow the lead of rivals Pfizer and AstraZeneca by announcing major job cuts. Analysts will also want an update on the health of its pipeline of new treatments.

A week after Exxon Mobil and Royal Dutch Shell reported record annual profits, BP will unveil is annual results on Tuesday. They are likely to bear out what has been a calamity-stricken year at the company, with quarterly pre-tax profit in the region of $4bn (£2bn), well off the pace of the $5.1bn generated in the previous year.

BHP Billiton, meanwhile, will publish its interim numbers on Wednesday. The world's largest miner is expected to unveil a pre-tax profit of $8.7bn for the first six months of its financial year. Analysts will be keen to see additional information on major projects, notably Atlantis, an offshore oil platform in the Gulf of Mexico that is set to come on stream producing 200,000 barrels of oil a day by September. "I am hoping to hear that Atlantis is on track," said Paul McTaggart, an analyst at HSBC. "That is an important incentive for the stock in the near term." Atlantis is a joint project with BP.

BHP will also give further details of the effect that the falling copper price has had on its performance. Mr McTaggart expects the company to take a $250m hit due to lag between when it brings the copper out of the ground - when it books the value - and when it is smelted and ready to sell three to four months later.

Rolls-Royce will roll out its numbers for 2006 on Thursday. Charles Stanley is expecting a major jump in pre-tax profit to £697m, up from £477m in 2005. Analysts will be anxious to hear the company's outlook for 2007, however, as some are predicting a slowdown in the aviation sector after a very good 2006. Rolls provides the engines to large commercial aircraft made by both Boeing and Airbus. If orders begin to fall off for planes, Rolls will take a hit as well.

Unilever is expected to reveal a performance largely flat relative to 2005, following a year that began poorly but ended on a high note, as chief executive Patrick Cescau's turnaround strategy showed signs of taking hold. The consumer goods company reports on Thursday, as does Reckitt Benckiser, seller of Cillit Bang, Dettol and Lysol cleaners. It will give quarterly numbers. Analysts will be hoping for a positive outlook for 2007 as synergies from the purchase of the Boots healthcare business are pushed through in growth in the overall business remains strong.

On the same day, ICI will be publishing its annual results, and BT, BG and Yell will give quarterly updates. Smith & Nephew will be grilled by analysts about its plans, having lost out in the auction of US rival Biomet late last year. Takeover speculation continues to simmer around the company, and chief executive Christopher O'Donnell will have to provide some clarity in the annual earnings call on Thursday.

Amid the individual company performances, the finance chiefs of the world's biggest economies will get together in Essen, Germany, for the G7 meeting to discuss the state of the global economy. Top of the list of gripes is likely to be the weakness of the Japanese yen and the ripple effects this has for the rest of the world. The US is expected to use the occasion to once again beat the drum about the need to rectify the artificially low value of the Chinese yuan.

And the Bank of England's Monetary Policy Committee meets on Thursday to decide whether to keep interest rates on hold. Most economists are forecasting one more rise before the end of the year, but whether it will come next week, after last month's shock rise, is anyone's guess. Philip Shaw, an economist at Investec, says: "There is a lot of uncertainty what the MPC is going to do this time. You have to say that there is a risk that they will do back-to-back increases."


Tomorrow 5

UK RESULTS: (final) Randgold Resources; (interim) Pace Micro Technology

Tuesday 6

UK RESULTS: (F) BP, ARM; (I) Dicom, Regent Inns, Danka Business Systems, Netcall, Sareum

Wednesday 7

UK RESULTS: (F) Sthree; (I) BHP Billiton

Thursday 8

UK RESULTS: (F) BG, GlaxoSmithKline, ICI, Reckitt Benckiser, Rolls-Royce, Smith & Nephew, Unilever, Alphameric, Alumasc; (I) BT, Invensys, Yell, Surface Transforms

Friday 9

UK RESULTS: None scheduled