The Week Ahead: Marston's set to serve up some market cheer

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The Independent Online

Marston's, the FTSE 250-listed pubs group, is expected to meet market expectations with its second-quarter trading update this Wednesday, standing out as a relatively safe bet in a sector that has been groaning under mountains of debt and the pressures posed by the recession.

The first-quarter update, posted in January, was in line with analyst forecasts, with like-for-like sales down 2.9 per cent at the managed pubs division and down 6 per cent at the tenanted and leased pubs division, while beer volumes at the Marston's beer company were ahead of the year before. The picture is expected to have improved in the second quarter, owing to relatively better trading conditions. The tenanted pubs business should be no worse, according to Numis Securities, although profits may be held back by additional support to licensees.

Citigroup also expects the company to have held its place, saying that its sense from the industry was that trading since the batch of new year statements had "not fallen further".

The broker's counterparts at KBC Peel Hunt share that view, and forecast another in-line update. "Marston's represents the best of the traditional pub model, with a clear focus on income, backed up by a secure balance sheet," KBC said, "Both in terms of covenants and repayments, we calculate that it has adequate headroom."

Today: Results/updates: Ferrexpo.

Tomorrow: Rio Tinto is due to publish its first-quarter production results, and according to UBS, the market should expect news of a soft quarter as the miner scales back production to counter the sliding demand for commodities.

Investors will no doubt be keen to gauge the health of the company's aluminium business given the report from Alcoa, the giant aluminium producer which disappointed the market with worse-than-expected results last week. Although the division is likely to bear the scars of the demand slowdown, according to UBS, some of the impact may be offset by the ramping up of the group's Sohar smelter in Oman. "Coal volumes are also expected to be lower," the broker said. "The iron ore business is also likely to see lower production and sales."

Results/updates: Clipper, SSL International, WS Atkins, Kenmare Resources, Marston's.

Thursday: UBS also weighed in on SABMiller, the drinks giant which is due to publish a fourth-quarter trading statement on Thursday. The broker, which forecasts 1 per cent in organic growth in lager volumes, expects more evidence of the weak volume trend seen over the last year.

"SAB's outlook is very uncertain due to (1) high emerging market exposure, (2) [the] need to increase prices continuously due to input cost headwinds and (3) limited cost-cutting potential globally," the broker said, maintaining a "neutral" stance on the group's stock ahead of the update.

Also on Thursday, Experian, the information services group, is due to post a second-half trading update and, according to Citi, the fourth-quarter organic growth numbers are likely to be the key feature of the day. The broker expects 3 per cent, down from 5 per cent organic growth in the third quarter. "Experian should reiterate its guidance for broadly flat margins year-on-year, which we have in our forecasts," Citi said. "We forecast net debt of $2.13bn – any material deviation will be important given [the] forecast year end [net debt to earnings ratio] of 1.8 times."

Results/updates: Aggreko, Ashmore, Aveva, EAGA, Experian, Halfords, Ideal Shopping Direct, SAB Miller.

Friday: Morgan Crucible is expected to publish a brief update in conjunction with its annual general meeting, which is due to be held at the end of this week. A fuller update is expected to follow in an interim management statement in May. Despite the recession, the industrial materials group has been doing relatively well, with the shares, although down on the year, rallying strongly since early March as the cyclical recovery has gained traction in the markets, according to Numis. "In addition the company recently announced that its NP Aerospace business had signed a 50-50 joint venture with Force Protection Inc to create Integrated Survivability Technologies or IST. IST has been awarded the contract for the Wolfhound Tactical Support Vehicle by the UK Ministry of Defence, worth £84m, to supply 97 heavy tactical support vehicles based on the combat-proved Cougar design," the broker said. "This is a further positive development for the NP business, securing a long-term strategic relationship with Force Protection, providing a fully-integrated product offering."

Results/updates: Morgan Crucible.

Economics Diary

Today: Rics house price survey for March; CML regulated mortgage survey for February.

Tomorrow: DCLG UK House Prices for February; BRC Retail Sales Monitor for March.

Thursday: Trade balance figures for February.

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