The Week Ahead: Exceedingly mixed fortunes for Mr Kipling group

By Michael Jivkov
Monday 12 December 2005 01:00

For its shares to make any progress in the wake of the results, investors will want reassurance that the setback at the UK's biggest cake maker was an isolated, short-term problem.

But it shouldn't all be doom and gloom. RHM is expected to turn in a strong performance from Hovis bread and solid sales growth at Bisto gravy. That should support overall sales on a par with last year's £736m.

Analysts expect a rise in underlying earnings for the period, of about 8 per cent to £70m.

TODAY: Results: Full year - Idox; Treatt. Interims - Lawrence; Renold; Air Music & Media.

TOMORROW: Interim results from Carpetright will confirm rumours of tough testing conditions at the carpets retailer.

Dresdner Kleinwort Wasserstein expects the group to deliver a 33 per cent slump in pre-tax profits and a 7 per cent drop in like-for-like sales in the UK.

But shares in Carpetright are unlikely to drop too much, despite such dire results, because of technical stock market factors.

Brokers report the presence of a short position in the stock accounting for 11 per cent of the company's share capital. In fact, should whoever is behind the bet decide to close it after the results, Carpetright shares will probably enjoy a rally, especially given the company's limited free float.

From a strategic point of view, investors will be keen to hear how the group's European expansion is going. Europe accounts for just 3 per cent of the company, but a planned move into Poland is likely to reap strong returns, thanks to the high growth rates in this part of the continent.

British Energy, which generates one-fifth of the UK's electricity needs, narrowly avoided bankruptcy last year. Now, 12 months on, the group finds itself in rude financial health.

Investors can expect the group to unveil first-half earnings of £132m, buoyed by strong wholesale electricity prices.

Comparisons with earnings in previous years are meaningless because of the radical restructuring British Energy has undergone. However, the full benefit of higher electricity prices will not be felt on these results because the company has forward-sold most of its contracts at lower prices.

Elsewhere, business is booming at the Spanish restaurant chain La Tasca. In its October pre-close update, the group boasted that it was trading well ahead of the comparable period last year.

La Tasca's interim results should reveal pre-tax profits of £2.1m, leaving it on course to serve up £3.9m by the full year.

At the latest count, the group's estate stood at 56 outlets, and it should have a further two restaurants up and running before Christmas - in Sheffield and in Newcastle. Few expect the restaurant group to have any problem beating City expectations of 11 new sites by the end of the current financial year.

Altium Securities sees the UK restaurant market as polarising into winning and losing brands. It is convinced that the La Tasca chain sits firmly in the former category.

"We believe the growing success of the La Vina brand will soon lead investors to value this company as a business with two growth brands that can operate successfully alongside each other in a similar fashion to the ASK and Zizzi brands," the broker said in a preview note of La Tasca's results.

Results: Full year - Civica; Zytronic. Interims - British Energy; Carpetright; La Tasca; Vega. Trading statements - Cadbury Schweppes.

WEDNESDAY: Results: Full year - Caretech Holdings; Interims - RHM; Sondex. Trading statements - Hays.

THURSDAY: Results: Full year - MyTravel. Interims - Millbrook Scientific. Trading statements - Gallagher; Whitbread.

FRIDAY: Despite rising fuel costs, Carnival is expected to deliver a 15 per cent rise in fourth quarter net income to $340m (£194m).

Given this performance, there is a possibility that the cruise ship operator will announce plans to return yet more cash to shareholders. As it stands, the group has only a limited share buy-back programme in place.

Additionally, there may be comments from management about plans to expand into Asia. Analysts predict that, for now, any Asian roll-out will be limited after Star Cruises (the continent's largest cruise operator) reported soggy results in November.

Results: Full year - Carnival; Minorplanet Systems. Interims - None. Trading statements - Regus.

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