The Week Ahead: Black gold production is down but profits set to rise

The focus is on the giant oil companies this week as BG, BP and Royal Dutch Shell issue third-quarter results. Given the spike over the last year in the price of the black gold, earnings comparisons are likely to be strong across the board, although crude has edged back in the last few months.

BP, which unveils its figures on Tuesday, received a boost last week from the news its main partner in the Macondo well prospect, Anadarko Petroleum, will pay $4bn towards costs from the Gulf of Mexico disaster. With a massive court case regarding the tragedy due to start in February, Deutsche Bank's Lucas Herrmann believes that "news flow will now start to improve" in the run-up to the trial, as shown by the settlement.

The analyst expects BP's production to have fallen 12 per cent from the same period the previous year, with recent disposals, maintenance projects and integrity tests continuing to bite.

However, he predicts positive news from its downstream operations, citing "a slightly better margin environment and improved refining availability" as supportive of his belief that profits will enjoy "a useful improvement".

BG Group's numbers are also out on Tuesday, and – like BP – its production numbers are expected to disappoint, with Societe Generale warning it has suffered a "heavy maintenance season". However, the broker does say there could be a positive surprise from its LNG operations thanks to higher spot prices in Asia.

There is perhaps the most optimism around Shell and its results on Thursday. Saying the update will "underscore [the] growth prospects" for the company, Collins Stewart's Gordon Gray points out that Shell's three major near-term growth projects are "just on stream or ramping up" and that, therefore, "the next few quarters represent the key period for delivery".

Today

Results/updates: Afren and McBride.

Tomorrow

A few City voices have started to question Arm Holdings recently, thanks partly to a number of its fellow chip companies cutting their forecasts. However, as Royal Bank of Scotland notes, it is industrial and PC operations that seem to have been hit rather than mobile phones, which account for nearly two-thirds of Arm's shipments.

Therefore, although RBS "expect softer royalty revenues" from the chip designer's third-quarter numbers on Thursday, it believes "this is already reflected in our estimates". It adds that this will be largely offset by its licensing activity and forecasts quarterly revenues of £121.1m.

Results/updates: Arm Holdings, BG Group, BP, Bunzl, International Personal Finance, Reckitt Benckiser and Senior.

Wednesday

The pharmaceuticals giant GlaxoSmithKline releases is set to release third-quarter results and UBS believes this will be the quarter GlaxoSmithKline returns to growth "after headwinds ... diminish" from its declining pandemic anti-flu, Valtrex antiviral and Avandia diabetes drugs, all of which knocked its interims back in July.

Meanwhile, JP Morgan Cazenove is "curious" over a potential update on GSK's buyback scheme, noting the company said the initial target was £2bn at most, but had already spent £1.85bn by July.

Results/updates: British American Tobacco, CSR, GlaxoSmithKline, Informa and Stobart.

Thursday

Deutsche Bank's Simon Champion believes recent "below average football results" will be partly to blame for William Hill reporting weak margins at its third-quarter results. The analyst also highlights the fact the bookie is up against tough comparatives for the period.

Results/updates: AstraZeneca, Croda, DS Smith, Go-Ahead, Inchcape, Kazakhmys, Laird, Royal Dutch Shell and William Hill.

Friday

Sir Martin Sorrell's advertising giant WPP releases third-quarter figures, after a number of vague trading updates during the period. Last week, it told investors that organic growth for September was in-line with July, which saw a 4.5 per cent jump. Given August was stronger, JP Morgan Cazenove expects that WPP will post organic revenue growth of just under 5 per cent, which "would also indicate a fairly steep hurdle" for the rest of the year if the company still wants to hit its forecasts.

Results/updates: Shire and WPP.

Economics Diary

TODAY

Eurozone PMI; eurozone industrial new orders; US Chicago Fed national activity index.

TOMORROW

BBA loans for house purchase.

WEDNESDAY

Confederation of British Industry industrial trends survey; ECB bank lending survey; US durable goods orders; US new home sales.

THURSDAY

CBI distributive trades survey; eurozone business climate indicator; US GDP; US pending home sales.

FRIDAY

GfK consumer confidence survey; US University of Michigan confidence data.

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