It has hardly been a promising run-up to the release tomorrow of Vodafone's full-year figures. The past few weeks have seen disappointing results from a number of its global peers, including Telecom Italia and the Dutch group KPN, while Carphone Warehouse, O2 and Everything Everywhere have all made cautious noises over the UK.
The downbeat sentiment has seen Credit Suisse cut its expectations for the telecoms giant's results, reducing its earnings-per-share (EPS) forecast to 16.19p. Although the broker believes Vodafone's performance in India and the US will come in above market predictions, it feels Europe will prove much more disappointing and it will be that area which investors focus on.
Its analysts are not exactly positive on the group's prospects in Europe for the current year, expecting organic growth to worsen as "mobile termination rates cuts bite and growth from smartphone adoption is offset by continued erosion of mobile voice and legacy data". They also point out that KPN's numbers and recent results from the Brussels-based Belgacom have "raised the profile of a cannibalisation trend we believe has been going on for a while".
Nomura's James Britton is another worried about these signs, feeling that Vodafone "is far from immune", although he says comments from its chief executive Vittorio Colao shows the company is "well aware of [the] need to make revenues more defensive".
Nonetheless, the analyst has recently downgraded his expectations as well, although he still believes it deserves its premium valuation, partly because "42 per cent of the earnings pie (the US) is going from strength to strength".
Cranswick kicks off the week with its full-year results on Monday, and Numis Securities' Charles Pick believes the pork supplier's trading over the fourth quarter could have been knocked by a slowdown in sales seen by Tesco and Sainsbury's, its two largest customers. However, the analyst does expect the sunny weather enjoyed over the past few weeks to have encouraged consumers to dust off their BBQs earlier than usual, "boosting sales of sausages and pork products".
Results/Updates: Cranswick, ITE Group and Phoenix.
Enterprise Inns may have made positive noises in the past about its dividend, but Citigroup does not expect it to be reinstated at the pub company's interim results on Tuesday, noting "the continued weak trading and debt repayment commitments".
Babcock International also updates the market tomorrow, and Peel Hunt predicts the defence services group's tone at its full year results will remain "positive" after its last release in March, with its profit-before-tax coming in at £223m. Meanwhile, Numis Securities' Mike Murphy believes investors will focus "on the outlook for outsourcing given the second-half reversal of the first-half slowdown seen in contracts coming out to tender," with the analyst claiming that "recent positive statements from Serco and Capita suggest an optimistic outlook statement".
Results/Updates: Avis Europe, Aviva, Babcock, Capital Shopping Centres, Enterprise Inns, Essar Energy, Renishaw and Vodafone.
Results/Updates: Compass, Experian, ICAP, Land Securities and Mothercare.
The results season for the utilities sector starts on Thursday with National Grid's preliminary results, and Investec predicts a profit-before-tax for the year of £2,390m and EPS of 49.6p.
JP Morgan Cazenove is more positive, forecasting EPS of 50.9p, and the broker says National Grid is likely to "show a significant improvement in the US performance and ... address the market's concerns about its balance sheet".
Another announcing preliminary results on Thursday is Invensys, less than two months since the surprise departure of the technology group's chief executive Ulf Henriksson. At the time, the company said it still expected to meet forecasts, although Collins Stewart has reduced its expectations as a result.
The broker's analyst Mark Wilson believes a "decent beat versus estimates, strong orders in [its IOM unit] and detailed guidance on a better [current financial year]... could relieve market fears". However, he does warn that "any weakness versus expectations and peers, or major restructuring could set the shares back sharply".
Results/Updates: Booker, Cairn Energy, Chaucer, Close Brothers, Dairy Crest, Euromoney, Grainger, Invensys, Investec, Marston's, National Grid, Premier Oil, SABMiller and TalkTalk.
Results/Updates: Mitchells & Butlers and Scottish & Southern Energy.
US Empire State manufacturing index.
CPI; DCLG house price data; RPI; US housing starts; US industrial production.
Average earnings data; Bank of England MPC meeting minutes; Claimant count change; US FOMC meeting minutes.
CBI industrial trends survey; Retail sales; US existing home sales; US Philadelphia Fed manufacturing index; US unemployment data.
EU current account data.Reuse content