The Week Ahead: Tate & Lyle has to keep investors sweet

Will Tate & Lyle stick with its dividend on Thursday? The answer to that question is likely to set the mood when the manufacturer of sugar and sweeteners posts its full-year results. The stock has performed well over the past month or so, thanks, in part, to the April pre-close update, which stoked hopes that the payout would be maintained; feeling reassured, investors bought in, shrugging off a negative result in a sucralose patent-infringement case.

"A material cut now may send out (more) unnerving signals about prospects ahead," Citigroup said last week, forecasting a small rise to 23.7p, compared to 22.6p in the year before.

Graham Jones, an analyst at Panmure Gordon, also thinks the market has got it right, and said that unless the company was planning to flag much weaker earnings going forwards, investors were likely to be greeted with a modest rise in the payout.



Today: Results/updates: Greencore, Holidaybreak and Aveva.



Tomorrow: A dividend cut may be in the offing when Northern Foods, the food producer behind the Goodfella's branded pizzas, posts full-year results tomorrow. Panmure Gordon said that while a reduction was not probable given that the business was well within its banking covenants and facilities, it was possible if the company decided to go ahead with capital expenditure-heavy projects, such as a new biscuit factory. "We wonder whether it will decide that the 70 per cent-plus payout ratio is too high, and cut the dividend," the broker said, adding that, as far the headline numbers were concerned, it expected pre-tax profits, excluding the pension finance credit, to grow by a creditable 12.6 per cent to £38.7m.

Also tomorrow, there is a strong likelihood that Topps Tiles, the tile and wood flooring specialist, may post forecast-beating interim results, according to KBC Peel Hunt.

"Our current pre-tax profits forecast for [the company], of £10.1m for the full year and £5.7m for the six months to [the end of March], was struck following January's trading update, which proved to be 'the eye of the storm' from a news-flow and trading perspective," the broker said. "At that time, we had felt the company would need to increase investment in pricing, to the detriment of its gross margin."

Results/updates: BSS, Speedy Hire, Torotrak, Topps Tiles and Northern Foods.



thursday: United Utilities is due to post full-year results later this week, and although the numbers will be complicated by one-off costs of about £10m related to capital restructuring, and a one-off deferred tax charge following the abolition of industrial building allowances, Charles Stanley expects the update to be in line with expectations.

Both the regulated and the non-regulated businesses are expect to show healthy growth in operating profits, with the former strengthening despite reduced industrial water demand and some cost pressures, and the latter building on the benefits of the Scottish Water contract and favourable foreign exchange movements.

"Other activities, which include central costs, are expected to make a small operating loss for the year," the broker added. "UU Property Solutions [the group's land and property management arm] is only expected to make a small operating profit, reflecting headwinds in the UK real estate market."

Results/updates: Brewin Dolphin, Man, Wolseley, Antofagasta, Hogg Robinson, United Utilities and Tate & Lyle.



Friday: Blacks Leisure is due to post preliminary results at the end of this week, and Numis expects a full-year pre-tax loss of £8.5m, broadly in line with consensus estimates. Beyond the numbers, the broker is looking forward to a strategy update from Neil Gillis, the company's chief executive. "We look for [him] to detail the next leg of his strategy to turn the business around, having successfully cut costs and improved in-store merchandising, and will be interested in both the performance of the converted Boardwear stores and the future of those remaining," the broker said.

Also on Friday, Severn Trent's full year results are likely to be in line with expectations, says Charles Stanley. The regulatory price review promises to dominate attention, as investors await news from the market regulator Ofwat. The final business plans for the 2010-15 regulatory period were submitted in April and Ofwat is due to issue a draft determination in July.

Results/updates: VP, Electrocomponents, Severn Trent and Blacks Leisure.

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