The Week Ahead: Glencore bid for Xstrata: sweetener doubts raised

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The Independent Online


Glencore has already announced its full-year numbers, so the proposed merger with Xstrata is instead expected to be the major focus when it reveals its preliminary results today. Although some in the Square Mile believe the commodities trader will bow to pressure and improve the terms of the tie-up, Liberum Capital claims Glencore "is indifferent as to the timing of the deal and will convey reluctance to spend more".

The next step will see the two companies meeting shareholders. Analysts from the broker say that "with both managements espousing the merger merits, we expect dampened expectations of an increase to the recommended terms".

Also today, Amlin kicks off a busy week for the insurers with its final results. Numis Securities' Nick Johnson is expecting it to have suffered a £177m loss after 2011 proved to be a major year for natural disasters. However, he points out that this is unlikely to be much of a shock given the Lloyd's of London firm pre-announced catastrophe losses last month.

Results/Updates: Amlin, British Polythene Industries, City of London Investment Group, Glencore International, Intertek, Ocado and Petrofac.


A number of profit warnings made 2011 a year to forget for Pace, and the set-top box manufacturer will announce its preliminary results with a fresh team in charge. In December, Mike Pulli, the head of its Americas division, took over from Neil Gaydon in the top role. Roddy Murray was last month named as its new chief financial officer.

As a result, comments from management are likely to be closely watched while the latest on its hard-disk supply chain, which was hit last year after its supplier Western Digital suffered major flood damage in Thailand, will also be of interest to investors.

Results/Updates: Alliance Trust, Ashtead, Betfair, Cape, Cupid, easyJet, Fresnillo, Inmarsat, John Menzies, John Wood Group, Johnson Service Group, Meggitt, Michael Page, Pace and Tullett Prebon.


With Admiral having blamed an increase in claims for a profits warning last November that prompted its share price to drop more than 25 per cent in just one session, this issue will be in focus again on Wednesday when the car insurer announces its full-year figures.

Deutsche Bank's David Bracewell says the key question is whether the recent trend is temporary and industrywide or "a structural decline in Admiral's underwriting advantage", adding that the results should provide insight into this.

Results/Updates: Admiral, Chime Communications, Cobham, Costain, Dignity, Hardy Oil & Gas, Jupiter Fund Management, Legal & General, Lookers, Melrose, RPS Group, Sportech and Tarsus.


Morrisons unveils its preliminary results on Thursday, with the grocer expected to announce an underlying pre-tax profit of £922m. Bank of America Merrill Lynch's analysts, meanwhile, believe that the main focus will be the performance of its new trial concepts and they will be on the lookout for the supermarket's roll-out plans.

Aviva is also releasing full-year figures, and Citigroup is predicting that after the insurer's surplus capital suffered a sharp drop to £2.7bn over the third quarter, it will have managed to recover £100m since. Nonetheless, the broker points out, this will still leave its capital buffer £1bn lower than 12 months previously.

Results/Updates: Aviva, Balfour Beatty, Cineworld, Clarkson, DS Smith, H&T, Hunting, Morrisons, Schroders and Spirax Sarco.


A strong performance in December means Numis' Douglas Jack is expecting JD Wetherspoon to reveal on Friday that its first-half pre-tax profits jumped 4 per cent to £33.4m. However, the analyst warns that the rest of the financial year will end up proving rather more difficult for the pubs company, with its margins continuing to be hit by the increasing cost of both food and drink.

Results/Updates: Aga Rangemaster, Aggreko, JD Wetherspoon, Marshalls, Old Mutual and SThree.

Economics Diary

TODAY Eurozone services PMI; Services PMI; US factory orders; US ISM non-manufacturing PMI.

TOMORROW BRC retail sales monitor.

WEDNESDAY BRC shop price index; US ADP national employment report; US crude oil inventories; US MBA mortgage applications.

THURSDAY Asset purchase facility; Bank of England Monetary Policy Committee interest rate decision; European Central Bank press conference; Trade balance; US unemployment data.

FRIDAY Consumer inflation expectations; Industrial production; Manufacturing production; NIESR GDP estimate; PPI data; US trade balance.