The Week Ahead: Dairy Crest expected to outperform competitors

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The recent profit warning from Robert Wiseman Dairies promises to drive interest in Dairy Crest, the rival food producer, which is set to step up before investors with its half-year trading update this week.

The former rattled the market with its trading statement this month, telling investors it expected stiff competition to hit operating profits in the second half of the current year and next year. The news triggered concern around Dairy Crest, which rushed out a statement saying that while "the liquid milk market is currently very competitive", management remained comfortable with its profit expectations.

Given the reassurance, this week's trading should contain few surprises, according to UBS, whose analysts expect investors to use the opportunity to "probe" management's assumptions. "For 2011, we are anticipating earnings before interest and tax of £110m (+4 per cent) and, helped by a slightly lower interest charge, adjusted earnings per share of 46.7p (+6 per cent) both of which are in line with consensus," the broker said.


Equity flows will be in focus when the funds group Aberdeen Asset Management posts a pre-close update this morning. On Friday, Evolution Securities said that recent evidence pointed to continued strength in the company's equity flows, with industry data showing that Aberdeen was the strongest-selling equity fund group in Europe in July. "While the market for the past 12 months has focused on the significant low-margin income outflows, there is evidence of these slowing while the high-margin equity flows demonstrate continued strength [in] building further revenue growth," the broker said.

Results/Updates: Wolseley, Quercus Publishing, Alliance Trust and Aberdeen Asset Management.


Results/Updates: Albemarle & Bond, Close Brothers, JJB Sports, AG Barr, Daily Mail & General Trust, Man and Game.


Numis is anticipating in-line full-year figures from Smiths, the technology firm. The broker said the update is likely to be underpinned by the twin themes of continued revenue growth and expanding margins, estimating full-year operating margins of 17 per cent, driven by the company's cost-reduction programme and operational improvements.

Beyond the headline numbers, the company may well be asked about the potential for restructuring moves, with UBS recently saying that, in its view, "Smith will ultimately be broken up". "We believe ... [the] investment case is attractive on a standalone basis," the broker said. "However, with the scope for Smiths to hit [9 out of 10] of its divisional targets in the next 12 months, we believe the break-up story will start becoming increasingly relevant. Hitting targets means less scope for disagreement on the valuation of the different divisions with potential buyers."

Numis also weighed in on Domino's Pizza, which is due to issue an interim management statement. The broker is looking forward to a strong statement, with trading momentum likely to be underpinned by factors such as the increased marketing of subs as the fast-food group aims to drive business during lunch hours, a £7m increase in local marketing and national advertising, store refits and re-launches, and the introduction of a dedicated Domino's iPhone app.

Results/Updates: Moss Bros, London Stock Exchange, Domino's Pizza UK & Ireland, and Smiths.


Panmure Gordon anticipates news of robust trading when the design consultancy Hyder Consulting issues its pre-close update. Its July update revealed trading was running slightly ahead of expectations, with a boost from its Asia-Pacific operations. "On the back of these increased activity levels, the order book is now expected to exceed £350m, with its bid pipeline remaining strong. We therefore believe [this week's] statement should be positive followed by a strong set of [interim results] in November," the broker said last week.

The advertising group M&C Saatchi is due publish its half-year figures. Ahead of the update, Numis is forecasting £5.8m in pre-tax profits and 4.8p in earnings per share, saying that, following a 5 per cent decline in like-for-like revenues in 2009, it expected the business to return to growth this year. "Clear Ideas, the group's project-based brand consultancy business, was first into the downturn and we believe the improvement in ... the fourth quarter of 2009 bodes well for M&C's other businesses," the broker said last week.

Results/Updates: Alterian, Compass, Hamworthy, ICAP, M&C Saatchi, Hyder Consulting and Dairy Crest.


Results/Updates: Helphire.


National accounts data for the second quarter

Current account deficit

CBI Monthly Distributive Trades Survey


Bank of England lending to individuals figures


Bank of England credit conditions survey


Bank of England housing equity withdrawal figures

Manufacturing PMIs