The Week Ahead: Sunny outlook continues for Kingfisher
Monday 20 July 2009
City analysts anticipate news of strong trading when Kingfisher, the retail group behind the B&Q chain, posts a second-quarter pre-close update this Thursday.
For B&Q, the first-quarter result was better than forecast, thanks in part to sunny weather and a late Easter. "At the time, we thought it would be unwise to extrapolate on this basis for the rest of the year," ING analysts said in a preview published last week. "However, with B&Q continuing to outperform the competition and helped by the ongoing mild weather, we now look for just - 2 per cent [in year-on-year like-for like-sales] for the second quarter."
UBS is also hopeful, saying a -2 per cent like-for-like sales performance at B&Q "would give a better two-year performance (which allows for seasonal factors) than that seen in the first quarter. "Some of this may be the result of the exceptional weather seen in the second quarter thus far, plus a retail sales backdrop which has been less bad than expected," the broker said.
Today: Numis expects Domino's Pizza to post a 19 per cent hike in first-half pre-tax profits this morning, despite the recent spell of sunshine, which while good for pubs and restaurants, works against pizza delivery joints. "We expect like-for-like sales to have slowed from the first quarter's 9.3 per cent, but should still be ahead of our full-year forecast assumptions of 5 per cent," the broker said, highlighting the scope for forecast upgrades.
Also today, Sthree, the recruitment group, is due to post interim results. UBS, which expects to hear of £11m in pre-tax profits, said the second quarter volumes in temporary staffing are likely to be down 22 per cent, while permanent staffing volumes are likely to be down 42 per cent. On the upside, cash flow performance should have remained "very strong", and the dividend should be maintained, the broker added.
Results/updates: Peter Hambro Mining, Sthree and Domino's Pizza.
Tomorrow: Results/updates: IG Group and Severn Trent.
Wednesday: Results/updates: Galiform, BHP Billiton and GlaxoSmithKline.
Thursday: Daily Mail & General Trust is due to post an interim management statement later this week, and Numis expects to hear of a continuation of the trends reported in the group's results in May, namely of growth from the business to business division, but tough conditions in the consumer division. "Encouragingly, the group also indicated improving trends in National advertising and continued stability in non-recruitment regional classified," the broker said.
At constant exchange rates, first-quarter revenues from Yell are likely to be down around 11 per cent, while earnings before interest, tax, depreciation and amortisation are likely to be 20 per cent lower than last year, according to the directories group's recent trading update.
Beyond the headline numbers, any updates on the group's capital restructuring process are likely to attract interest. "Clearly the equity impact of any refinancing remains highly uncertain," Deutsche Bank said in a recent preview note. "With equity value at 5 per cent of the enterprise value, the shares are effectively an option on management's ability to negotiate a refinancing on terms which are not excessively onerous or punitive."
Also on Thursday, preliminary results, and the accompanying outlook statement, from Misys should be in line with the group's pre-close statement, according to Panmure Gordon.
"Misys will stress its operational improvements to instil confidence in 2010 profit forecasts, and should flag up the healthcare division as a being a significant wild card," the broker said.
Results/updates: Misys, Capita, International Personal Finance, Compass, De La Rue, Imperial Tobacco, Colt Telecom, Daily Mail & General Trust, Carphone Warehouse and Kingfisher.
Friday: Vodafone is due to post an interim management statement, and UBS expects the key performance indicators, or KPIs, to illustrate the difficult trends faced by the group. "Overall, we expect organic service revenues to fall by 3 per cent despite the first time inclusion of India. We expect European revenues to come under additional pressure, falling 5.5 per cent compared with a decline of 3.3 per cent in the fourth quarter and a fall of 0.2 per cent a year ago," the broker said, adding that in the emerging markets, solid performance in India and at Vodacom was likely to be offset by what it termed "significant weakness" in Turkey.
Results/updates: United Utilities and Vodafone.
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