The Week Ahead: After the Easter eggs, the City is ready for a feast at Tesco

Abigail Townsend
Saturday 05 October 2013 11:04

Easter is over, the kids are back in school and so the City gets back to the grindstone as the corporate newsflow shifts up through the gears.

In the US, a variety of household names and market heavyweights will update investors in the first-quarter earnings season. These include Coca-Cola, Eastman Kodak, Reebok International, brewing giant Adolph Coors and that tech bellwether to end all bellwethers, Microsoft. A clutch of global drugs groups will also be updating the markets, including Pfizer, Eli Lilly and Wyeth in the US and Novartis and Sanofi-Synthelabo, both hopeful purchasers of their French neighbour Aventis.

At home, two of the biggest names reporting are Tesco and Abbey National. The supermarket chain - the UK's largest - is, as usual, expected to be the bearer of good news when it unveils final figures on Tuesday. Domestic like-for-like sales are predicted to be up around 6.5 per cent on the previous year, while pre-tax profits are forecast to rise from £1.40bn to £1.68bn. The pressure on rivals also continues unabated: last week Tesco revealed it was slicing another £70m off prices.

At the results, investors will be looking for an update on Tesco's overseas operations - a growing contributor to group profits - and any comment on potential store purchases following Wm Morrison's recent acquisition of Safeway.

Abbey National holds its annual general meeting and provides an update on first-quarter trading on Thursday. The banking group hit the headlines last week when the National Association of Pension Funds, whose members control more than £600bn of investments, hit out at the level of bonuses paid to executives, including chief Luqman Arnold. In fact, overall, it has not been a good year so far for Abbey National. Details of a £686m loss in 2003, and news that it would not be immediately returning cash from its £60bn disposal plan to shareholders, have hit the stock hard.

Investors will therefore be hoping for some better news this week, particularly regarding trading conditions in this new financial year. The focus will be on the state of the mortgage market, especially now interest rates are once again creeping up.

Elsewhere, news and information group Reuters will be posting first-quarter figures when it holds its AGM on Thursday. Earlier this year, Reuters said core recurring revenues for the first quarter were likely to be down around 9 per cent, and most analysts have seen no reason since then to disbelieve the forecast.

The hope, though, is that the worst is over for Reuters, which suffered from a majority investment in electronic brokerage Instinet during a market downturn, and stiff competition from the likes of Bloomberg. Investors certainly think so: shares in the group have surged a hefty 75 per cent start since the start of 2004.

Other announcements include a pre-close statement from Dixons; production reports from mining giants Rio Tinto and BHP Billiton; and trading updates from British American Tobacco and the Anglo-Dutch consumer goods group Reckitt Benckiser.

Allied Domecq, the owner of Malibu rum and Beefeater gin, posts half-year figures and analysts are predicting strong top-line growth. Currency issues remain, however, to the tune of around £25m, and mean pre-tax profits are expected to rise by only 4 per cent to around £266m.

On the Continent, Swiss food giant Nestlé gives an update on trading, while Dutch retailer Ahold publishes full-year figures. The chain, which last year admitted profits had been overstated, is likely to post a loss in the last quarter because of price cuts and the strength of the euro against the dollar. A recent rights issue is expected to have helped cut debt from €11.6bn (£7.8bn) to around €7.6bn, however.

At Nestlé, organic growth is forecast to be around 5 per cent for the quarter, though investors will be most interested in any further developments at its water division. The group, which owns Perrier, has admitted it is considering offloading the arm, which has been hit by poor trading and a continuing dispute with the workforce.

Complementing a busy corporate week is a raft of economic updates. These include UK inflation data for March, the initial estimate for first-quarter GDP, and retail sales figures.

The Bank of England's Monetary Policy Committee publishes minutes from its most recent rate-setting meeting, and economists are expecting these to show a lively debate and a split vote.

Rate-setters in the US will also be getting in on the act: Federal Reserve chairman Alan Greenspan testifies to the Joint Economic Committee and his tone and remarks could set the tone for rates decisions over the next few months.


Tomorrow 19

UK: Results: (Final) Caldwell Investments.

Tuesday 20

UK: Results: (F) CeNeS Pharmaceuticals, Gresham Computing, Highland Gold Mining, Rugby Estates, Tesco, Vanco; (interim) James R Knowles Holdings, Mouchel Parkman; (First quarter) ARM Holdings.

Wednesday 21

UK: Results: (F) Maverick Entertainment, Superscape Group; (Q1) Autonomy, Reuters.

Thursday 22

UK: Results: (F) Brown & Jackson; (I) Brown & Jackson, McCarthy & Stone, WH Smith.

Friday 23

UK: Results: (F) Camellia, Hitachi Capital UK, Slingsby (HC).

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