The Week Ahead: BSkyB to update after takeover hopes end
Monday 25 July 2011
It is fair to say it has been rather a dramatic few weeks for BSkyB, but now that News Corp has withdrawn its bid, investors' attention will be back on the broadcaster's numbers when it announces its full-year results on Friday.
Ever since the takeover was scuppered, a lot of focus around the group has been about whether it will take the opportunity to return cash to shareholders. JP Morgan Cazenove believes there is a potential for a special dividend of 120p, and the broker says that the subsequent leverage level would be "comfortable".
The broker estimates that BSkyB will reveal that it has achieved nearly 350,000 net additions and that it continues to see an improvement in its margins, "with the investment cycle at a low point in the short term".
Numis Securities' Paul Richards, meanwhile, is expecting a profit-before-tax of £950m, slightly under market forecasts, and a rise in its revenues of around 10 per cent to £6,488m. Overall, says the analyst, it will show "another good operational and financial performance, with continued progress on broadening the group's product range and expanding margins".
On the outlook, Mr Richards notes that earnings will come under pressure from BSkyB's decision to keep its package prices at the same level next year, although he adds that there will be "partial mitigation from ongoing cost efficiencies".
The week starts with Domino's Pizza's interim results, with Peel Hunt expecting the pizza delivery group to reveal a pre-tax profit of just over £19m, a rise of 13 per cent, and that it has opened 19 new stores, matching the same period the previous year.
Results/Updates: Domino's Pizza, National Grid and Reckitt Benckiser.
After enjoying a boost from Apple's impressive numbers last week, ARM Holdings releases its second-quarter results on Tuesday. Matrix is expecting an operating profit of £41.7m, but feels that its guidance for the following three months "could be muted" thanks to recent weakness in the wireless market as well as supply chain disruptions following on from the Japanese earthquake and tsunami.
Another updating the market tomorrow is BP, with the energy giant announcing figures for the first time since its tie-up with Rosneft fell apart. Saying the results are "set to reflect the transition period that the company is in", Bank of America Merrill Lynch sees "limited room for surprises" and predicts it will still be "losing high margin barrels due to extensive maintenance in Angola and the lack of drilling permits in the Gulf of Mexico".
The broker feels its production will have dropped 11 per cent year-on-year, while Collins Stewart's analysts are slightly more pessimistic, predicting a fall of 12 per cent. In terms of its downstream operations, they say it will have been hit by problems at its Texas City refinery as well as "lower trading profits than the exceptional levels of the first quarter".
Results/Updates: African Barrick Gold, ARM Holdings, BG Group, BP, DMGT, GlaxoSmithKline, Imperial Tobacco, Informa, Pace and PZ Cussons.
British American Tobacco reveals its first-half results on Wednesday, with the cigarette manufacturer's organic volumes having dropped 1.8 per cent in the first quarter. Royal Bank of Scotland thinks it will end seeing a decline of 2 per cent for the first six months, but that its organic revenue will still rise over 5 per cent thanks to continued strong pricing.
The broker's analysts expect it to have received a boost in the Asia Pacific region from recent supply problems experienced by Japan Tobacco, although they add that "any profit impact will be much more subdued, since the stock is being air-freighted". Meanwhile, they believe volumes will have fallen across most of the Americas region, while in Spain an increase in tax and a aban on smoking means Western Europe is "likely to be weak".
Results/Updates: Autonomy, Brewin Dolphin, British American Tobacco, CSR, Dignity, easyJet, ITV, Laird, Lancashire Holdings, Marston's, Provident Financial, Rathbones, Renishaw and Sage.
Results/Updates: AstraZeneca, BAE Systems, BT, Centrica, Croda, Compass, Halma, Investec, Invensys, Kazakhmys, Kofax, Mondi, National Express, Northumbrian Water, Rank, Reed Elsevier, Rolls-Royce, Royal Dutch Shell, RPS, Shire, St James's Place, TalkTalk and Tate & Lyle.
Results/Updates: Anglo American, BSkyB, Charter International, IAG, Jardine Lloyd Thompson, Pearson, Rentokil Initial, Travis Perkins and UBM.
BBA high street banking statistics; US Chicago Federal national activity index.
GDP preliminary estimate; service sector figures; US consumer confidence.
CBI industrial trends survey; US durable goods orders.
CBI monthly distributive trades survey; Land Registry house price index; US pending home sales.
US GDP; US University of Michigan consumer sentiment index.
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