The Week Ahead: BHP to reveal earnings as bid drama mounts

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The Independent Online

BHP Billiton, due to publish its first-half earnings this Wednesday, also faces the Takeover Panel's "put-up or shut-up" deadline, to either mount a formal bid or walk away from Rio Tinto this week. This is the story so far – after a string of rumours suggesting that BHP would enhance its initial three-for-one share offer for Rio, Shining Prospect, a Singapore-based entity majority owned by China's Chinalco, moved in on Friday. The Chinese acquired 12 per cent of London-listed Rio Tinto shares, which equates to 9 per cent of the global, dual-listed company, which is also traded on the Australian Securities Exchange.

The Chinese were always considered an interested party, but after some whispers suggesting an eastern advance earlier in the week, the talk until Friday centred on how far BHP could, or would, go to get a hold of its rival. On Friday, as the news of Chinese manoeuvres filtered through the market, analysts began to doubt whether BHP's proposed consolidation exercise would go any further: at £60 per share, the Chinese paid well above what BHP had initially offered for Rio. If BHP does decide to proceed with its bid, it will have to delve deeper into its pockets.

This week, the market will be keen to hear what Marius Kloppers, BHP's chief executive, has to say for his company. Will he take on the Chinese and challenge them to a duel over the world's iron ore deposits? Or will he pull back on the reins, dismount and walk away from Rio Tinto? Either way, expect more than a routine results presentation.

Today: Results/Updates: Wolfson Microelectronics, Ryanair, Sage, Northern Rock bid deadline.

Tomorrow: BP will publish its fourth quarter and 2007 full year results tomorrow. Tony Hayward, who took over the chief executive's chair from Lord Browne last May, has spent most of the year simplifying the company. In November, as part of Mr Hayward's strategy to streamline operations at the energy giant, BP announced the sale of its company owned and operated US convenience stores. The strategy has been implemented against a backdrop of rising oil prices and this week investors and analysts, who have been guided to lower their expectations recently, will be keen to study the fruits of his labour. The wider public, especially the green lobby that was incensed by Royal Dutch Shell's record profit figures last week, will also be watching.

Brokers at Dresdner Kleinwort expect disappointing first half numbers from Regent Inns tomorrow. The market, however, continues to support the company's stock: buyers are attracted by the bid potential. Indeed, in the middle of January, Regent Inns said it was in early talks with some suitors. Dresdner notes the interest, but adds: "... interested parties would only be interested at knock down prices and a bidding war is unlikely".

Results/Updates: BP, Arm Holdings, Regent Inns.

Wednesday: Analysts expect BSkyB to report a decline in operation profits following impact from broadband and pay-tv investment. Revenues are still forecast to rise by 10 per cent and investors will be focusing on the states of the company's operations: investors and analysts will be looking closely at subscriber figures. In addition to noting the number of people who left the company's fold or signed up to its services over the last six months, the market will also be keen to hear about the number of subscribers who have switched to cheaper tariffs. A high number will likely be read as yet another indicator of a consumer slowdown.

Results/Updates: BHP Billiton, BSkyB, UK Takeover Panel's BHP Billiton/Rio Tinto Bid deadline.

Thursday: Commercial property company British Land will announce its third quarter results. The credit squeeze and economic uncertainty have hit the entire property sector, inflating yields and hurting valuations across the board. As a result, investors will no doubt focus on the company's property portfolio and study the impact of tougher yields. "We'll be looking for management commentary with regards to when they will look to re-enter investment markets in a meaningful way," said Deutsche Bank, "With growing concern about the health of the UK economy, we will also be looking closely at the leasing markets and the group's vacancy rates."

Analysts expect Rolls Royce to reveal higher full year profits and a capital return to shareholders. Deutsche Bank forecasts £825m in pre-tax earnings before interest, ahead of last year's figure of £748m, with between £250m and £500m in higher ongoing dividends. DB expects the scale of any cash return, however, to be "more uninspiring".

Results/Updates: GlaxoSmithKline, Rolls Royce, Unilever, British Land, BT, Yell Group, Halfords.

Friday: None.

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