The Week Ahead: Hays profits under pressure despite solid year
Monday 01 September 2008
Hays, the FTSE 250-listed recruitment group, is due to publish full-year results tomorrow. Following a positive fourth-quarter update last month, Panmure Gordon is anticipating evidence of a "solid" performance in the year to June, forecasting adjusted pre-tax profits of £237.9m. The broker has also pencilled in a full-year dividend of 5.9p, up from the 5p per share paid last year.
Beyond the numbers, the focus will be on the outlook for the year ahead as the business deals with a slowing economy. "The company has already indicated that the UK business has been coming under increasing pressure, with the focus on profit protection (no headcount growth) rather than growth," Panmure said. "Comparatives from last year are still relatively strong and, with the current climate perhaps more akin to the early 1990s rather than the slowdown of 2001-2003, this could be a source of further downside risk."
As a result, for 2009, the broker forecasts adjusted pre-tax profits of £200.5m, at the lower end of the current consensus range of £258m to £192m.
"We believe we will see consensus move towards the bottom end of the range, which could create some pressure on the share price," the broker added.
Today: The software group ANT is due to publish interim results and, given the commentary in the company's AGM statement in May, and the positive newsflow since, KBC Peel Hunt expects an in-line performance in the period to June.
"The theme at the [2007 results in February] was of cost control with second-half improvement as [the] units shipped increased 40 per cent year-on-year and royalty rates improve with the product mix, while licence revenue declines, as expected, in favour of ongoing royalty development," the broker said in a recent preview note, adding: "Cash at 31 December was £6.2m, and we expect £4.7m for the first half of 2008, falling to £4.4m, or 18p per share [for the full year]."
KBC also weighed in on Goals, the five-a-side football centre provider which is due to publish interims today. The broker expects a 19 per cent hike in pre-tax profits, to £3.7m, and a 17 per cent increase in earnings per share, to 5.8p.
"Following the first three additions in March, all three of the remaining openings, at Dudley, Tolworth and Northampton, are already on site and should open progressively over the second half, to meet the target of six additions for 2008," KBC said, adding that another six additional sites in 2009 should help earnings to grow by another 30 per cent.
Results/updates: Goals, ANT.
Tomorrow: Results/updates: Ashtead, Hays.
Wednesday: Analysts expect a subdued announcement from Punch Taverns, the pubs group which is due to publish a trading update midweek. Management is expected to reconfirm that it remains confident of meeting the market's lowered full-year profit forecasts. But as Morgan Stanley pointed out in a recent preview note, against the backdrop of a protracted consumer slowdown and a debt-laden balance sheet, "it is hard to see the stock outperforming".
The broker anticipates some improvement in life-for-like sales this quarter, but margins are expected to come under pressure from rising food and energy costs, foretelling what is likely to be a challenging year ahead.
Also on Wednesday, the online payment specialist Neteller is due to publish interim results, and Evolution Securities forecasts $4.1m in first-half earnings before interest, tax, depreciation and amortisation. Pre-tax profits are expected to come in at $3.1m, with 1.9 cents in earnings per share.
"Neteller will grow on the back of online merchants, mainly online gaming, and in Europe for the foreseeable future," the broker said, adding: "We see this as an attractive growth driver and see Neteller's product as still work in progress. As it increased the range of product on offer it should be able to deliver its target of increasing active users."
Results/updates: DS Smith, Signet, WS Atkins, Neteller and Punch Taverns.
Thursday: Whitbread, the FTSE 100-listed hospitality group, is due to publish a trading update near the end of this week and, according to Dresdner Kleinwort, while there could well be some deceleration in like-for-like's for the last 11 weeks, any impact is expected to be mitigated by a strong performance at Premier Inn in London. The broker said: "The pace of growth [is] likely to slow in coming quarters though and we have reduced estimates to better reflect this and see few immediate catalysts while UK consumer uncertainty remains."
Also on Thursday, SQS, the software testing and quality management services provider, is due to publish interim results. Evolution anticipates €63.3m in revenues, with €5.6m in earnings before interest and tax, reflecting assumptions of robust top-line growth in the company's core geographies, stable margins and a relatively immaterial contribution from the recent acquisition of Sweden's Validate.
"Our assumptions of growth and stable margins should prove conservative given the group's positive AGM statement and recent update highlighting outsourcing contract wins," the broker said, reiterating its "buy" rating on SQS.
Results/updates: McBride, SQS and Whitbread.
Friday: Results/updates: Go-Ahead, HMV and JD Wetherspoon.
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