The Week Ahead: Water groups riding regulatory wave

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Water stocks took off last week after the more generous than expected price controls announced by the regulator Ofwat. This week it is the turn of four water companies, Kelda, Northumbrian Water, Pennon and Bristol Water, to report interim results. While it may be too early for the full implications of the Ofwat decision to be taken into account, it will certainly make sure that rising bills remain in the headlines for at least another week.

Northumbrian Water gets the ball rolling tomorrow. One of the smaller UK water companies, with a market capitalisation of £758m, Northumbria makes 96 per cent of its profits from UK water supply. Consensus forecasts are looking for £42m of pre-tax profits for the half-year to 30 September.

Kelda, the largest of the four, reports half-year numbers on Wednesday. The owner of Yorkshire Water has a more diversified portfolio of unregulated businesses than its neighbour to the north, which investors will hope to see further news of. Kelda observers will also look for news of a rate case at the US water subsidiary Aquarion, in Connecticut, as its US business has not performed in line with expectations since the purchase was completed in 2002. Kelda is expected to report a pre-tax profit of about £105m.

The relative minnows Bristol Water and Pennon, the owner of South West Water, report on Thursday. Pennon makes 17 per cent of profit from unregulated waste management activities. But expect to see an angry reaction from customers in the South-west if Pennon beats the £43m-45m pre-tax profit for the first half of the year that analysts have pencilled in.

In fact, expect to see an angry reaction from water consumers everywhere, no matter what these companies report.

TODAY: No major companies reporting.

Results: Full year - Aberdeen Asset Management. Interims - Acal; Carclo; Goldshield; GTL Resources; Heath (Samuel); Lawrence; Northgate information; SCi Entertainment.

TOMORROW: Shareholders in ITE Group will be looking for another set of strong figures from the exhibition and conference organiser if the share price momentum is to continue. The company has gained 73 per cent in the last 12 months. The broker Williams de Broe is looking for an increase in full-year pre-tax profits from £15.5m to £16.9m.

Still in the small caps, e2v Technologies, which floated in July, reports maiden half-year figures. The share price has risen from 155p at the flotation to 192p, so the market is clearly looking for encouraging numbers.

Results: Full year - Centurion Electronics; Character; Dewhurst; Future Networks; Grainger Trust; Landround; Ultraframe; Victrex. Interims - Alba; Anite; Christian Salvesen; e2v Technologies; Focus Solutions; Halma; Northumbrian Water; Paypoint; PHS; Quintain Estates.

WEDNESDAY: Unusually, analysts are not expecting many shocks from Stagecoach, as the company reassured the market in October that it was on track to achieve forecast half-yearly profits. It's all relatively good news for shareholders these days - not too long ago the stock was trading at little more than 12p, a long way away from the 90p it closed at on Friday.

The vast majority of company profit, 82 per cent, comes from UK buses and analysts are expecting solid performance from that division. However, the US bus subsidiary, Coach, remains a worry, particularly when dollar weakness is added to the mix. Complex accounting procedures at Virgin Cross Country could push that part of the business into the red as well.

Another company whose stock hit miserable lows in the not too distant past is Helphire, also due to report interim results. Performance has been helped by the extreme weather recently in the southern states of America, but dollar weakness is likely to have a significant impact on profits.

Results: Full year - ATH Resources; Jessops; Medisys; Numis Corporation; Treatt. Interims - DS Smith; Glotel; Helphire; International Group; Kelda; Phoenix IT; Stagecoach.

THURSDAY: A relatively weak housebuilding sector will be looking for more encouraging numbers from Berkeley Group, after fears over a housing sales slowdown and dramatic cost increases dampened sentiment in recent weeks. Berkeley operates almost exclusively in the South-east and London, so may suffer more than its peers.

CSFB is not expecting great things from Premier Farnell, the engineering group, advising clients last Wednesday to sell before third-quarter results.

Results: Full year - Contemporary Entertainment; Deltron Electronics. Interims - AEA Technology; Berkeley; Bristol Water; Computerland; Dyson; First Technology; Greene King; Pennon; Premier Farnell.

FRIDAY: No companies due to report.

Economics Diary

TODAY: UK - manufacturing output (Oct); BRC retail sales monitor (Nov). Eurozone - finance ministers meet. Germany - manufacturing new orders (Oct).

TOMORROW: Japan - leading indicator (Oct). Ecofin meeting. Germany - ZEW survey: expectations (Dec). Canada - interest rate decision. Australia - interest rate decision. US - non-farm productivity (Q3).

WEDNESDAY: Japan - GDP (1st revision) Q3. New Zealand - interest rate decision.

THURSDAY: UK - trade in goods & services (Oct); interest rate decision. Germany - industrial production (Oct). Sweden - interest rate decision. US - weekly jobless claims.

FRIDAY: France - inflation (Nov). Opec meeting in Cairo. US - producer price inflation (Nov); Michigan consumer sentiment survey (Dec).

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