The Week Ahead: Rising confidence boosts expectations for Yell

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The Independent Online

Recovery trends will come under the scanner when Yell, the FTSE 250-listed directories group, issues full-year figures this week. UBS expects the results to reassure investors worried about the potential for a rebound in revenues.

Closely correlated data tracking confidence among small- and medium-sized businesses (SMEs) in the US has been improving and should eventually boost Yell's performance. The recent US SME optimism index from the National Federation of Independent Business (NFIB), for instance, evidenced a small improvement in sentiment in April, "ending the unprecedented run" of weak readings, according the broker.

UBS explained last week: "The trends highlighted by the NFIB data are generally encouraging, and are supportive of comments from Yell and peers that sentiment is improving, even if this is not yet being full shown in revenues."

Numis is also hopeful about the US, noting the recent trading updates from the large agency groups point to the possibility of outperformance in the company's operations. The picture on this side of the Atlantic is likely to be less inspiring, with the broker expecting SMEs in Spain and the UK to "remain under pressure for some time".

Numis said: "We believe there is considerable uncertainty over the guidance the group will give for the first quarter of 2011, with the potential for signs of US recovery [being] balanced against ongoing weakness in the group's European markets."

Indeed, management may well present 2010 as a year of "transition rather than recovery", says Deutsche Bank, whose analysts point out that while the pressure on revenues is easing, "full-year sales are still expected to decline". The broker added: "The share have risen [about] 24 per cent in the year to date. For them to outperform further in the near term, we need to see reassurance on the group's ability to de-lever, and the outline of a credible strategy to sustain online revenue growth."

Results/Updates: Mitie, Big Yellow and Robert Wiseman Dairies


Deutsche Bank is anticipating news of a 10.3 per cent hike in revenue growth when the soft-drinks maker Britvic issues half-yearly results. After strong trading over the first quarter, the broker said the company faces challenges over the rest of the year. Revenue growth comparatives, for instance, are tougher, while the poor weather over January is likely to have hit sales over the second quarter. Looking more closely at the first half, Deutsche said the Irish market is likely to have remained "challenging", though stronger margins should have supported Britvic's performance.

Dairy Crest's efficiency drive is likely to be among the key talking-points when the group posts its full-year figures tomorrow. "The company is running programmes to improve efficiencies and deliver margin improvements," Panmure Gordon said in a preview last week. "We will be looking for an update on the progress of these programmes, as well as an update on the degree to which the [online] 'milk & more' doorstep business is helping to slow the decline in overall doorstep volumes."

Also tomorrow, Numis is expecting an in-line update from Paragon, the mortgage lender, which is due to post its interim results, with impairments remaining lower owing to the exceptional interest rate environment.

Results/Updates: British Land, Vodafone, Drax, Smiths Group, Paragon, Dairy Crest, Britvic and Yell


Results/Updates; Mitchells & Butlers, Experian, ICAP, Land Securities, Scottish & Southern Energy, Chaucer and Spectris


UBS is looking forward to "robust numbers" from National Grid, the power firm which is due to issue full-year results this week. The performance is likely to be driven by the UK-regulated business, and by lower interest costs. The broker forecast an 11 per cent rise in pre-tax profits to £1.97bn, with 57.3p in earnings per share.

Also on Thursday, Numis does not expect any surprises when Mothercare issues its full-year figures. The retailer posted its pre-close update at the beginning of April, and the broker is looking for £39.8m in pre-tax profits, which would equate to a rise of about 8 per cent on the previous year.

"As Mothercare reports sales [on a] quarterly [basis], we will not get any trading update, but look for reassurance that the soft fourth quarter out-turn in the UK has firmed up," Numis said, adding that, elsewhere, it was looking forward to more positive commentary on the group's international activities.

Results/Updates: Investec, Marston's, Great Portland Estates, Cairn Energy, Mothercare and National Grid


Results/Updates: British Airways, United Utilities, London Stock Exchange and Close Brothers