The Week Ahead: Balfour Beatty hopes to build on better results
Monday 15 August 2011
Fears over the global economy were knocking Balfour Beatty's share price even before the markets slumped, and the latest fall has caused Britain's largest infrastructure services company to drop by around a quarter since March.
The group will be hoping it can reverse the trend, starting this Wednesday when it releases its interim results. At the start of July Balfour issued a trading statement for the first half of the year – during which time it finished work on the Aquatics Centre in east London for the 2012 Olympics – in which it said it was on track to meet its targets.
Citigroup expects Balfour's results to be "solid", and the broker's analyst David Phillips is predicting its earnings before interest, tax and amortisation to come in at around £140m. This would be roughly 7 per cent lower than the previous year, although he points out that, without one-off issues, it would have been level.
Mr Phillips notes that Balfour has suggested the usual weighting of its full-year results towards the second six months will be higher than usual, and he expects the rest of the year to end up providing around 60 per cent of its profits.
Therefore its forward-looking comments are likely to be more important than ever, and Howard Seymour of Numis Securities believes Balfour will "point to [a] challenging outlook in its major geographic markets", although he notes that this would be "in line with previous... expectations".
Mr Seymour is still positive, however, saying that "even with the threat of UK public sector cutbacks to take place, we believe that Balfour Beatty has the potential to maintain earnings at current levels organically" as well as "significant potential for bolt-on growth in its major overseas markets."
With Michael Page issuing a trading update in July, it seems unlikely there will be too much new information from the recruiter when it releases its interim results on Monday. Peel Hunt'sanalysts expect most of the attention will focus on the company's comments on the economic climate as well as on signs of how it has been performing since the period covered by its last announcement. They predict "a relatively subdued outlook for Europe, offset by continuing strength in the overseas businesses".
Results and updates: Michael Page and Mitie.
The reporting season for the insurance sector has largely drawn to a close, but Resolution still has its first-half results to announce on Tuesday. Given the buy-out vehicle's acquisition of Axa's UK life business last year, Citigroupexpects the group – whose other businesses include Bupa Health Assurance and Friends Provident – to reveal IFRS earnings for the six months of £372m, which would be more than double those for the same period the previous year.
Results and updates: Pennon andResolution Group.
In a quiet week for results, Eurasian Natural Resources is one of just a few blue chips updating the market; it is due to announce its first-half figures on Wednesday. Earlier in the month, the miner released a productionupdate in which it said iron volumes had fallen over the second quarter,although its output of saleable ferrochrome – which contributes around half its earnings – had risen.
Also releasing figures is Henderson, which recently published a trading statement forecasting that underlying profits for the first half of the year would rise by around 80 per cent to as much as £87m. The fund manager claimed the boost came from retail investors, and David McCann of Numis Securities says he will be focusing on its dividend as well as assets under management and revenue margins.
Results and updates: Balfour Beatty, Eurasian Natural Resources, Henderson and Talvivaara.
Savills releases its interim results on Thursday, with UBS predicting it could provide the spark for the estate agent's share price to rally.
Unsurprisingly in the housing market, the broker expects Savills to announce that its operations in London have been strong, predicting its performance in the capital – especially with regards to residential – should "offset any weakness elsewhere."
The analysts from UBS are forecasting its profits before tax to be just over £18m – a year-on-year increase of 6 per cent – and they add that Savills should be helped by the continuing worldwide real estate recovery, pointing out that more than 40 per cent of thecompany's revenues come from the Asia-Pacific region.
Results and updates: Savills.
Results and updates: Jupiter FundManagement.
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