The Week Ahead: Vodafone due to ring up record losses of £15bn

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The Independent Online

The mobile phone giant Vodafone is set to announce the biggest ever loss in UK corporate history today. Analysts expect it to slump into the red by about £15bn, a deficit that will easily top the previous record set by the group in 2002 of a £13.5bn pre-tax loss.

Asset-write downs of up £28bn at its operations in Germany, Japan and Italy are largely to blame for the colossal figure. However, today's loss will probably not be enough to set a new European record. That dubious distinction is held by Deutsche Telekom, which three years ago lost £17bn.

Arun Sarin, Vodafone's chief executive, is also expected to unveil an extensive programme of cost cuts as part of a strategic review. He is said to be looking to reduce the mobile phone giant's cost base by up to 20 per cent by outsourcing back-office operations and cutting jobs. The first of the job losses are likely to come at Vodafone's Newbury headquarters where about 500 staff are forecast to be left out of work.

But there should be good news for shareholders. Vodafone is expected to raise its dividend with analysts arguing it has the fire-power to enact an increase of up to 15 per cent.

Results: Full year - Blueheath Holdings; BSS Group; Domestic & General Group; Hamworthy KSE; Vodafone Group.

TOMORROW: Shareholders of Northern Foods will be nervous before full-year results today, and they have every right to be. The company has already delivered two profits warnings in 2006, blaming a sharp fall in biscuit sales and pricing pressure in its chilled foods division. Analysts expect the company to cut the dividend by 50 per cent, and little improvement is expected in the overall performance of the group. It will save £22m from halving the dividend, money it needs to spend on overhauling the business. Shareholders will be keen for news of disposals of some of Northern's branded businesses as it concentrates instead on its own-label business, which has suffered from the push towards healthier eating. The broker Williams de Broë has pencilled in pre-tax profits of £45m, a 27.6 per cent decline from 2005.

The water utility AWG is part way through a £75m share buy-back programme that could be extended now the company has got rid of Morrison Construction Services, a disastrous acquisition that will see the company report a £55m write-down. Analysts are looking for pre-tax profits of £112m.

Results: Full year - AWG; Computer Software; Expro International; Healthcare Enterprises; ICAP; Northern Foods; Oasis Healthcare; Quintain Estates; Scottish & Southern Energy; Speedy Hire. First half - Abacus Group; RWS Holdings. First quarter - Premier Farnell.

THURSDAY: The world's largest quoted hedge fund, Man Group, had a rough time in May with its flagship managed futures fund reporting a 3.7 per cent fall. Other funds did even worse, some dropping by as much as 5 per cent. But the longer-term performance has been excellent and investors regard short-term movements as part and parcel of investing in a hedge fund. The shares have been among the best performers in the FTSE 100 so far this year, climbing more than 20 per cent against a flat market, in spite of the turbulent London equity markets. Consensus forecasts are for pre-tax profits of £677m.

Vedanta Resources is expected to enter the FTSE 100 at the expense of Cable & Wireless or Daily Mail & General Trust. The Indian copper miner has benefited from a surge in commodity prices. Expect to see pre-tax profits in the region of £425m.

Johnson Matthey, the precious metals miner and speciality chemicals group, is one of the least-heralded stocks in the blue-chip index, perhaps unfairly so given that the shares have performed superbly over the past five years. The company is a major supplier to the catalytic conversion industry and as such has benefited from the move towards cleaner fuel emissions. With booming investment in fuel cell technology, analysts expect a bullish outlook statement, along with pre-tax profits of about £218m.

United Utilities' pre-close trading statement, delivered in late March, confirmed the group should report results in line with expectations. The group has recently appointed a new chief executive, and a new chief finance officer will arrive in August. Analysts believe they will find the company in good shape and no nasty shocks are expected with the results. Williams de Broë expects pre-tax profits of £495m, a 23 per cent improvement on 2005 numbers.

Results: Full year - Applied Optical; Electrocomponents; Johnson Matthey; Maelor; Man Group; Pennon Group; Plasmon; Printing.com; Shanks Group; United Utilities; Vedanta Resources. First half - API Group.

FRIDAY: Results: Full year - Caffyns. First half - The Local Radio Company.

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