The Week Ahead: Buoyant B&Q set to lift Kingfisher's results

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The Independent Online

Kingfisher may post a better than expected first-quarter update this week, as cost-cutting initiatives and the benefits of more stable trading conditions feed through to the DIY retail group's profits.

Deutsche Bank expects Kingfisher's first-quarter profits to jump by 9 per cent to £98m, above a consensus forecast of £94m. "We believe market forecasts for Kingfisher are too low," the broker said, "They have risen by 5 per cent since March, and we expect them to move up in response to a strong first-quarter profits release."

Deutsche expects profits at the B&Q owner to rocket by 38 per cent, thanks to the company's cost-cutting initiatives. "The B&Q profits will prompt analysts to reassess their forecasts, since consensus suggests a 45 per cent decline in full-year profits [at the chain]" the broker added.

UBS, which is slightly behind consensus with a profits forecast of £93.5m, also highlighted the potential for surprise at B&Q, saying that calendar and weather effects could lead to flat like-for-like sales, compared to its expectation of a 5 per cent decline. "Margins could also be better than expected, as there are signs that industry pricing is moving up, while demand elasticity remains low," the broker said. It added that B&Q was a "big swing factor" in terms of profits, as a 1 per cent sales swing would, based on its estimate, raise the group pre-tax profits by 4 per cent.

Today: The computer services group Phoenix IT is due to post full-year results this morning. The numbers should be in line with consensus estimates, according to Panmure Gordon, but the company is likely to err on the side of caution and highlight the challenging trading environment. The broker expects Phoenix's revenues to rise to £241.5m, up from £230.8m a year ago, with £46.5m in earnings before interest, tax, depreciation and amortisation, and £25.6m in pre-tax profits.

Results/updates: Acal, Chloride, and Phoenix IT.

Tomorrow: The water and waste management group Pennon posts full-year results. Deutsche Bank forecasts £164m in pre-tax profits, compared to £149.6m last year, with earnings-per-share of 38.8p and a dividend of 20.3p. As with others in the water industry, regulatory moves are likely to be the key talking point of the day, as investors await draft pricing proposals from Ofwat, the market regulator.

Results/updates: Intermediate Capital, Kcom, Umeco, Pennon and Kingfisher.

Wednesday: Expect a strong third-quarter update from the online sports bookmaker Sportingbet. Numis Securities is forecasting £10.6m in earnings before interest, tax, depreciation and amortisation, and 1.4p in earnings per share. "With current trading, in our view, likely to show further growth in the fourth quarter, we think our [full year] pre-tax profits forecast of £28.7m (earnings per share of 4.7p) offers upgrade potential," the broker said. It warned that, while it retained a positive view on the stock given its strong gains so far this year, Sportingbet's valuation discount relative to its peer group had closed. Also on Wednesday, full-year figures from Alterian, the software group, are likely to be in line with a April's trading update, says Panmure Gordon, with revenues growing strongly despite the difficult economic backdrop. "Alterian benefits from a very robust recurring revenue model, a first-rate team, ongoing tight cost control, best-in-class product offer and good cash," it said. "The results top a year which saw it integrate MediaSurface in double-quick time and UK market service providers standardise on its technology."

Results/updates: Alterian, British Airways, Hampson Industries, Iomart, Northumbrian Water and Sportingbet

THURsday: Johnson Matthey, which makes catalytic converters, posts full-year numbers. Given that it has already guided for earnings-per-share in the range of 85p to 90p and net debt at about £540m, Charles Stanley expects investors to focus on current trading. In particular, the outlook for platinum group metals, which are used in the production of catalytic converters, is likely to arouse interest.

"Metal de-stocking appears to have come to an end. However, the outlook for global auto-production is likely to remain depressed for a while," the broker said. "By contrast, demand for platinum from the jewellery trade, particularly in the Far East, has been strong. Weakness in the platinum prices has resulted in a surge of interest, mainly from Chinese manufacturers and in April trade sales hit an all-time high."

Results/updates: Johnson Matthey, Synergy, Wincanton and Morrisons.

FRIday: Results/updates:Bellway, Carphone Warehouse, Hornby and Sthree.