The Week Ahead: Will fixed-line losses tarnish BT's broadband of gold?

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The Independent Online

Nearly six months into 2004, a year that is already shaping up to be one of recovery, and this week will provide a crucial overview as to how a diverse range of sectors are faring.

Nearly six months into 2004, a year that is already shaping up to be one of recovery, and this week will provide a crucial overview as to how a diverse range of sectors are faring.

BT and mmO 2 will be flying the flag for tech and telecoms companies. The City is expecting to hear about another tough quarter when the former publishes final figures on Thursday, and tricky questions will no doubt be asked about Ofcom's review of broadband pricing. Under its chief executive, Ben Verwaayen, BT's strategy has shifted towards broadband but the concern is that the group is losing more revenues from its fixed-line business than it generates from the high-speed internet service.

It will not be all doom and gloom, however. As witnessed when it recently announced a joint venture with US tech giant Hewlett-Packard, BT is performing well in the services division. Analysts are also looking for a more aggressive stance regarding share buybacks.

MmO 2 has already given detailed guidance to the City about its full-year figures, with some optimistic that the group, which was spun out of BT in 2001, will unveil its first profits. Should that be the case, an update on commencing dividend payouts is also expected. Management has already said this is something it has started to think about, and the City remains hopeful they will act on that sooner rather than later. Consensus forecasts are looking for pre-tax profits of between £70m and £75m against last year's losses of £10.2bn, although that did including £9.8bn of one-off items.

Moving away from communications, and beer and food will be top of the agenda. Brewing giant SABMiller - the London-listed South Africa-US hybrid that is often rumoured to be a possible suitor for Scottish & Newcastle - is producing full-year figures, while pub chains Enterprise Inns, Mitchells & Butlers and Wolverhampton & Dudley will be posting interim numbers.

In February, former Six Continents business Mitchells & Butlers released a trading statement showing group sales had increased by 5 per cent. But concerns remain over margin, as the group faces pressure from rising costs against a lower pricing background.

Wolverhampton & Dudley, which is both a pub chain and a brewer, has also made encouraging noises about sales but, here, operating margins are expected to be stronger. Cash generation also continues to be buoyant, so analysts will be hoping for news about possible acquisitions or share buybacks.

Cadbury Schweppes will be using its annual general meeting on Friday to update on two key operational issues: US beverages, which has suffered from Americans undergoing a health makeover and opting for water over soda, and the ongoing integration of chewing gum business Adams. Most expect cost cutting to have bolstered operating profits at US beverages but for underlying trading to remain weak.

Catering giant Compass will also bring the market up to date when it publishes first-half results on Wednesday. The group, the world's biggest caterer which counts a raft of public and private bodies as clients, said in March it expected underlying turnover growth of 7 per cent. Pre-tax profits are predicted to rise from £269m to around £288m. However, the impact of food price inflation on margins remains an issue.

Elsewhere, controls group Invensys is due to announce full-year results and, with a trading statement released only last month, the devil will be in the details. It has been a bumpy few years for Invensys, as it strove to overcome tough trading, reorganise, cut debt and rip out costs. That restructuring is still under way, meaning the range of consensus profits figures is extremely wide. Instead, investors will be looking closely at how core-operating profits are faring and what progress is being made on costs. An update on the crucial North American market will also be sought.

From old industry to new media and stock market debutantes: directories group Yell publishes full-year results on Tuesday. Just under a year after it floated, investors will be looking for an update on UK trading conditions, especially as BT is gradually moving back into the classified telephone directory market. The group has already said it is on track to meet full-year expectations.

Yet all that is just the tip of a busy week. Other names worth watching out for include British Airways; Heathrow and Gatwick owner BAA, which is producing full-year numbers; the once mighty Marconi; Capital Radio and a clutch of utilities, including National Grid Transco, United Utilities and Scottish & Southern Energy. The week rounds off on Friday with hotel chain Hilton and Lloyds TSB hosting AGMs.


Tomorrow 17

UK: Results: (Final) British Airways, Mice; (first quarter) Cambridge Antibody Technology.

Tuesday 18

UK: Results: (F) Business Post, Cranswick, Land Securities, Marconi, mmO 2, VT, Yell; (interim) Abacus, Care, Countryside Properties, Enterprise Inns, ScS Upholstery; (Q1) iTouch.

Wednesday 19

UK: Results: Aveva, LiDCO, J Sainsbury, Scottish & Southern Energy; (I) Baggeridge Brick, Compass, Holidaybreak, Mitchells & Butlers.

Thursday 20

UK: Results: (F) Babcock International, BPB, BT, Findel, Imagination Technologies, Invensys, London Stock Exchange, Luminar, Mat, Mothercare, National Grid Transco, SABMiller, United Utilities; (I) Avon Rubber, Capital Radio, Scottish Radio Holdings.

Friday 21

UK: Results: (F) Castings, Information Dynamics; (I) Attentive Systems, Wolverhampton & Dudley Breweries; (Q1) Tomkins.