The Week Ahead: Ocado finally on target to deliver its first profit

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The Independent Online

Nearly a year since floating – and almost a decade after it was founded – if City scribblers' calculations are proved correct, Ocado should announce its first net profit today.

The online grocer is revealing its first-half figures, with few surprises expected given that it last updated the market in May. Bank of America Merrill Lynch predicts the group will have finished the period some £700,000 in the black.

But despite the milestone being reached, the broker is not optimistic, pointing out Ocado's comments last month citing "capacity constraints as it struggled to cope with demand". As a result, its analysts say they will "be keen to hear the impact this has had on customer service levels which we expect have been pressured".

Ocado has estimated that its sales over the second quarter will have grown between 17 and 18 per cent, having risen nearly 25 per cent in the previous three months, a slowdown that, says Barclays Capital, is "more severe than we had originally expected". But it predicts an improvement will be seen in the present quarter, saying that "going into the summer ... the growth potential is higher".

In terms of the longer-term prospects of the company, the broker is fairly positive about the increased competition from Waitrose's online offering, saying that, although it expects the supermarket to take about £7.5m of sales from Ocado in 2012, this will be "arelatively minor trim to the [roughly] 21 per cent growth we forecast".



Today

Results/Updates: Ocado.



Tomorrow

Standard Chartered's first-half pre-close update on Tuesday is expected to show the bank continuing on from its update last month, says Citigroup, when its wholesale and consumer banking units impressed. The brokerpredicts that, apart from corporatefinance activity, the group will see revenue growth across the board, adding that Hong Kong in particular "looks promising".

Results/Updates: Carpetright and Standard Chartered.



Wednesday

Stagecoach reveals its preliminaryresults on Wednesday, and despite the transport group having risen nearly 20 per cent since the start of the year, Morgan Stanley still believes the market's expectations are too low. The broker estimates the company's earnings per share will come in at 23.6p, 3 per cent ahead of consensus, saying its bullish stance is driven by the performance of Stagecoach's rail business.

Highlighting that it is getting close to a net cash position, Morgan Stanley's analysts say they expect the company will make a one-off cash return to shareholders within the year,having done similarly in 2004 and 2007.

Results/Updates: Anite, Betfair and Stagecoach.



Thursday

Its share price dropped by a fifth after a profit warning in May, so investors in Keller will be praying for no more nasty surprises when the construction group issues its pre-close statement on Thursday. With the first-half numbers not being announced until the start ofAugust, the update is expected to be brief, but one area it could shine a light on is the state of its order book.

Liberum Capital says "industry overcapacity" has been behind Keller's growth in this area slowing, while the broker adds that "comparatives are becoming more difficult, the recovery is losing momentum and macro data is dire".

They add: "With such a high second-half weighting and very limited visibility, we believe investors may struggle to look through to the sunny uplands."

The pressure will be on Antonio Horta-Osório when Lloyds Banking Group's chief executive, who took over the role in March, announces the conclusions of his strategic review on Thursday. Those hoping for wide-reaching changes will be disappointed,believes Goldman Sachs, which says: "Mr Horta-Osório's vision for the group will constitute 'evolution, not revolution' relative to the current strategy."

The broker expects efficiency savings to be one key focus, while adding that Lloyds' wealth and insurance businesses – as well as the Halifax – will be "building-blocks in the group's future growth strategy".

Greene King is in focus on Thursday, with the pubs group issuing its full-year results, and Numis Securities' Douglas Jack believes the numbers should meet, and possibly beat, expectations. The analyst is forecasting a profit before tax of £140m, but says that, although "the risk to forecasts and valuations are on the upside", management should manage expectations by limiting any upgrades.

Results/Updates: Debenhams, Greene King, Keller, Lloyds Banking Group and Petrofac.



Friday

Results/Updates: Wood Group.

Economics Diary

Today

Hometrack house prices survey;US personal income data; US personal spending.



Tomorrow

Final GDP; Land Registry house price index; US consumer confidence.



Wednesday

Bank of England data on lending to individuals; US pending home sales.



Thursday

Eurozone CPI; GfK consumer confidence survey; International Monetary Fund leadership decision deadline; US unemployment claims.



Friday

CIPS manufacturing PMI; US construction spending; US ISM manufacturing.

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