The Week Ahead: JD Wetherspoon looks to new sites after holiday

Click to follow
The Independent Online

It seems seems fitting somehow that JD Wetherspoon is releasing an update in the wake of two consecutive four-day weekends, and the pubs group will certainly be hopeful that the close proximity of Easter and Friday's royal wedding will have persuaded drinkers to enjoy themselves.

With its third-quarter interim management statement out tomorrow, the company will almost certainly have benefited from the surprisingly sunny weather experienced in recent weeks. Numis Securities' Douglas Jackexpects consumers encouraged out by the warmth to have helped it kick on from its expectation-beating first-half figures released in March.

The group opened its 800th pub last month, and Mr Jack says he will be on the lookout for further updates on new sites, noting that just 12 were opened in the first six months of the company's year, despite JD Wetherspoonaiming to reach 50 by the end of 2011. However, he does concede that if this target is missed, "the impact on profit should be minimal".

The major issue, according to theanalyst, is its struggle to rebuild its margins, and he believes the group "is on track for its fourth consecutive year of negative like-for-like profits, reflecting its difficulty in raising prices and volumes simultaneously, due to a highly price-sensitive customer base, at a time when costs and taxes are rising".


Results/Updates: Aberdeen Asset Management and F&C AssetManagement.


Logica issues its update for the first-quarter on Wednesday, and although analysts at Morgan Stanley predict that its top line growth will have slowed, the broker admits there is "potential upside to our forecasts" following very positive recent results from Accenture and Oracle.

Also releasing figures tomorrow is Legal & General, and JP Morgan Cazenove expects the insurer's sales growth to be driven by the UK. Its analysts are forecasting new business sales for the first quarter to have increased year-on-year by more than 5 per cent,although they expect its international businesses may have grown just 1 per cent.

Results/Updates: Antofagasta, Henderson, Kazakhmys, Legal & General, Logica, Next, Provident Financial, Sage, Spirent, JD Wetherspoon and WSP.


With its share price knocked recently by the news that Johnson & Johnson – which in the past has frequently been talked about as a potential bidder – has agreed to acquire Synthes, Smith & Nephew will be hoping that Thursday's first-quarter results help to enthuseinvestors once again. Citigroup's Matthew Dodds is one positive voice on the medical devices manufacturer, with the analyst forecasting a "good performance ... versus tough comparisons". To that end, Mr Dodds predicts a rise in sales of 3.6 per cent, with its orthopaedics unit performing particularly strongly.

"We believe the company is wellpositioned to benefit from economic recovery as volume growth improves, driving operating leverage," says an upbeat Mr Dodds, who adds that he also expects "further opportunity for margin recovery in the near term through improved inventory management, and longer term through movement of production to low-cost countries such as China".

The drinks conglomerate Diageo isanother updating the market on Thursday, with the Guinness-maker announcing its figures for the third-quarter, and HSBC reckons it will confirm thatorganic sales have "remained lacklustre", with a fall in Europe of 3 per cent balanced by its international businesses rising 10 per cent.

Results/Updates: Amec, Diageo, Lloyds Banking Group, Mondi, Randgold Resources, Rexam, Schroders, Smith & Nephew, St James's Place and Vedanta Resources.


It is International Airline Group's first set of quarterly results since the formal merger of British Airways and Iberia, so a great deal of the focus is likely to be on how the tie-up between the duo is progressing. Since the new combined company began trading in January, its share price has been hit by the ever-rising cost of oil, so the issues of fuel hedging and capacity are likely to be discussed.

Royal Bank of Scotland points out that the period last year was hit by BA's cabin crew going on strike, which helps provide a weak comparable, and the broker predicts that its operating loss will be down to €146m from €237m. "We will be keen to understand the thinking regarding the BA pension deficit," its analysts add, "which has the potential to be a material positive catalyst for shares, but always remains a risk."

Results/Updates: Cobham, Forth Ports, IAG, IMI, Lancashire, Rentokil Initial, Rolls Royce and RPS.

Economics Diary


CBI distributive trades survey; CIPS manufacturer PMI; US factory orders.


Bank of England lending figures; BoE Monetary Policy Committee meeting starts; BRC shop price index; CIPS construction PMI; M4 money supply; US ADP employment report; US ISM non-manufacturing index.


Bank of England interest ratedecision; BoE official reserves data; CIPS services PMI; European Central Bank interest rate decision; US jobless claims.


Car registration figures; PPI; Insolvency data; US consumer credit; US unemployment rate.