Stock Market Week: Spirits are up as Diageo celebrates its first anniversary

A YEAR after the wedding is often an ideal time to assess a marriage.

Apart from rare exceptions, after 12 months the first burst of passion has vanished, the dreamy abandonment of the honeymoon is over and the two partners can have a long hard look at their relationship.

Corporate marriages, or mergers, are no different. After a year, the glitzy announcement, the self-congratulatory speeches and the usual platitudes on synergies look but a distant memory and it is time to assess whether the combined business actually works.

Shareholders in Diageo will be able to do just that on Thursday. The publication of maiden final results from the oddly named drinks and food giant will give investors a chance to have a good look at the bedroom of the two partners, Guinness and Grand Metropolitan, for the first time since their pounds 24bn marriage in 1997.

The story so far has been somewhat disappointing. The groups' core spirits and food brands, which include Smirnoff vodka, Johnnie Walker whisky and Burger King outlets, had a tough first half as the Asian crisis and a host of disposals restrained growth.

But, as every Guinness lover knows, "Good Things Come To Those Who Wait", and shareholders who waited for the second half of the year to be poured should not be disappointed.

Underlying profits, at around pounds 1.77bn, should show a considerable improvement on the first half, even though they will be down on last year's pro-forma number of pounds 1.85bn.

Sales in Diageo's core business are expected to have picked up over the past six months, driven by a strong performance in the black stuff and in the spirits brands.

The Pilsbury food business, maker of Green Giant canned corn, should have recovered from a poor first half thanks to lower costs and increased capacity.

Diageo's ongoing programme of non-core brands disposals should generate a bit of excitement at the analysts' meeting. Industry experts will want an update on the sale of the Cruzcampo Spanish brewery to the Dutch group Heineken, which is still to be approved by the Madrid authorities.

Merger savings will also be a source of excitement. At the time of the deal, Guinness and Grand Met promised to lopsome pounds 290m off their cost base. About pounds 15m is already in the bank and analysts expect Thursday's announcement to bring a further pounds 100m-plus saving, mainly from the spirits and wine division.

For those more interested in bar gossip than numbers, the main topic of conversation will be the name of the successor to chief executive John McGrath, even though no announcement is expected with the results. Mr McGrath is expected to leave at the end of the year and the market's money is on Paul Walsh, the head of Pilsbury.

A couple of big-name retailers will provide a glimpse of life on the High Street with their interims. Kingfisher, on the block tomorrow, should report a 30 per cent leap in half-year profits to around pounds 250m. The B&Q- to Woolworths giant will benefit from the first contribution from Castorama, the French do-it-yourself chain. The Gallic DIY group, in which Kingfisher bought a 57-per-cent stake in December, had a sluggish first quarter but should have recovered in the second three months.

B&Q will once again be the star performer in the UK thanks to the soaraway success of its Warehouse megastores and the introduction of a new value- for-money range.

Potential pitfalls could come from Woolworths with anecdotal evidence suggesting that the toy and music market was not much fun during the period.

Kingfisher's perennial quest for acquisitions will take centre stage. After the failure of the Asda takeover, the market appears to favour a European DIY buy, possibly in France or Spain.

Next, interims on Wednesday, will continue the week's retail theme. The market has been awash with rumours that Next has had a buoyant summer. The tell-tale sign that things were looking smart was a shorter-than-usual sale of just two weeks. The cut in discount sales and a general improvement in Next's product offering should boost profits. Deutsche Bank's Sundeep Bahanda is shooting for around pounds 67m, up from pounds 44m in the crisis-ridden first half of 1998. News on the much-rumoured disposal of Ventura, the credit management unit, will also be sought.

The ferry and cruise giant P&O should report a 23 per cent jump in pre- tax profits to around pounds 175m tomorrow. The cruise division is expected to have steamed ahead thanks to a stellar performance from the US boats. Ferries are set to have held steady, while ports will be boosted by a good results from Australia. P&O's decision to sell or spin-off non-core businesses to focus on its sea operations has been welcomed by investors. However, the timetable of some of the slimming down, such as the float of the construction group Bovis, is still unclear and the market will be looking for more details.

The cement maker Blue Circle will unveil mixed profits today. The group's exposure to Asia will depress the numbers as the Far East operations are expected to just about break even. The US division should have done better but overall profits should be down to around pounds 112m from pounds 131m last time round. Expect a lot of questions on the rumoured pounds 400m disposal of Blue Circle's heating division.

On Thursday, aircraft engineer British Aerospace will show an improved cash-flow following the pounds 1.2bn payment from Saudi Arabia in the complex arms-for-oil Al Yamamah contract. Interim pre-tax profits should be ahead of last year, say pounds 360m against pounds 344m in 1998.

News
people
News
people And here is why...
News
peopleStella McCartney apologises over controversial Instagram picture
Life and Style
Laid bare: the Good2Go app ensures people have a chance to make their intentions clear about having sex
techCould Good2Go end disputes about sexual consent - without being a passion-killer?
PROMOTED VIDEO
Arts and Entertainment
Richard Burr remains the baker to beat on the Great British Bake Off
tvRichard remains the baker to beat as Chetna begins to flake
News
i100
Sport
footballArsenal 4 Galatasaray 1: Wenger celebrates 18th anniversary in style
Arts and Entertainment
Amazon has added a cautionary warning to Tom and Jerry cartoons on its streaming service
tv
News
people
News
The village was originally named Llansanffraid-ym-Mechain after the Celtic female Saint Brigit, but the name was changed 150 years ago to Llansantffraid – a decision which suggests the incorrect gender of the saint
newsWelsh town changes its name, but can you spot the difference?
News
ebooksAn unforgettable anthology of contemporary reportage
Arts and Entertainment
Kristen Scott Thomas in Electra at the Old Vic
theatreReview: Kristin Scott Thomas is magnificent in a five-star performance of ‘Electra’
News
Destructive discourse: Jewish boys look at anti-Semitic graffiti sprayed on to the walls of the synagogue in March 2006, near Tel Aviv
peopleAt the start of Yom Kippur and with anti-Semitism flourishing, one Jew can no longer ignore his identity
Life and Style
Couples who boast about their relationship have been condemned as the most annoying Facebook users
tech
Arts and Entertainment
Hayley Williams performs with Paramore in New York
musicParamore singer says 'Steal Your Girl' is itself stolen from a New Found Glory hit
News
i100
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Trainee Recruitment Consultant - Birmingham - Real Staffing

£18000 - £23000 per annum + Commission: SThree: Real Staffing are currently lo...

Trust Accountant - Kent

NEGOTIABLE: Austen Lloyd: TRUST ACCOUNTANT - KENTIf you are a Chartered Accou...

Graduate Recruitment Consultant - 2013/14 Grads - No Exp Needed

£18000 - £20000 per annum + OTE £30000: SThree: SThree are a global FTSE 250 b...

Law Costs

Highly Competitive Salary: Austen Lloyd: CITY - Law Costs Draftsperson - NICHE...

Day In a Page

Italian couples fake UK divorce scam on an ‘industrial scale’

Welcome to Maidenhead, the divorce capital of... Italy

A look at the the legal tourists who exploited our liberal dissolution rules
Time to stop running: At the start of Yom Kippur and with anti-Semitism flourishing, one Jew can no longer ignore his identity

Time to stop running

At the start of Yom Kippur and with anti-Semitism flourishing, one Jew can no longer ignore his identity
Tom and Jerry cartoons now carry a 'racial prejudice' warning on Amazon

Tom and Jerry cartoons now carry a 'racial prejudice' warning on Amazon

The vintage series has often been criticised for racial stereotyping
An app for the amorous: Could Good2Go end disputes about sexual consent - without being a passion-killer?

An app for the amorous

Could Good2Go end disputes about sexual consent - without being a passion-killer?
Llansanffraid is now Llansantffraid. Welsh town changes its name, but can you spot the difference?

Llansanffraid is now Llansantffraid

Welsh town changes its name, but can you spot the difference?
Charlotte Riley: At the peak of her powers

Charlotte Riley: At the peak of her powers

After a few early missteps with Chekhov, her acting career has taken her to Hollywood. Next up is a role in the BBC’s gangster drama ‘Peaky Blinders’
She's having a laugh: Britain's female comedians have never had it so good

She's having a laugh

Britain's female comedians have never had it so good, says stand-up Natalie Haynes
Sistine Chapel to ‘sing’ with new LED lights designed to bring Michelangelo’s masterpiece out of the shadows

Let there be light

Sistine Chapel to ‘sing’ with new LEDs designed to bring Michelangelo’s masterpiece out of the shadows
Great British Bake Off, semi-final, review: Richard remains the baker to beat

Tensions rise in Bake Off's pastry week

Richard remains the baker to beat as Chetna begins to flake
Paris Fashion Week, spring/summer 2015: Time travel fashion at Louis Vuitton in Paris

A look to the future

It's time travel fashion at Louis Vuitton in Paris
The 10 best bedspreads

The 10 best bedspreads

Before you up the tog count on your duvet, add an extra layer and a room-changing piece to your bed this autumn
Arsenal vs Galatasaray: Five things we learnt from the Emirates

Arsenal vs Galatasaray

Five things we learnt from the Gunners' Champions League victory at the Emirates
Stuart Lancaster’s long-term deal makes sense – a rarity for a decision taken by the RFU

Lancaster’s long-term deal makes sense – a rarity for a decision taken by the RFU

This deal gives England a head-start to prepare for 2019 World Cup, says Chris Hewett
Ebola outbreak: The children orphaned by the virus – then rejected by surviving relatives over fear of infection

The children orphaned by Ebola...

... then rejected by surviving relatives over fear of infection
Pride: Are censors pandering to homophobia?

Are censors pandering to homophobia?

US film censors have ruled 'Pride' unfit for under-16s, though it contains no sex or violence