THE SCOTSMAN: BP and shell set to cash in on oil surge: “Shell is preparing for a new phase when its Dutch and UK parent companies merge this year and Thursday will see it announce a quarterly dividend for the first time alongside its results for the three months to end-March.” (ShellNews.net) 25 April 05
THE WEEK AHEAD IN THE MARKETS
MARTIN FLANAGAN
CITY EDITOR
BIG Oil and Big Tobacco stride on to the reporting stage this week, with BP and Shell expected to continue to benefit from the stratospheric oil price and Imperial Tobacco’s profits also expected to puff ahead.
BP is expected to report first- quarter pre-tax profits of $4.3 billion (£2.2bn) tomorrow, against $3.5bn a year ago.
Analysts say the results should reflect the continued strong operating environment in terms of total production and energy commodity prices. BP should indicate good results in the upstream, exploration and production business. Refining profits in the downstream refining and marketing business should also be robust, reflecting continued higher refining margins.
Rival Shell is preparing for a new phase when its Dutch and UK parent companies merge this year and Thursday will see it announce a quarterly dividend for the first time alongside its results for the three months to end-March. Fund manager Gerrard believes Shell will report pre-tax profits of $5.1bn for the first quarter - up from $4.7bn at the same stage of last year.
Few surprises are expected from Imperial Tobacco when it unveils its interim results tomorrow, but investors will want to be reassured that it is maintaining its share of the critical British and German markets, where high taxes and bootlegging have driven cigarette volumes down. The City range for pre-tax profits at IMPs is £487m to £510m against £454m last time. There could also be an update on the share buyback programme, with around £200m being returned to shareholders by the end of September.
Market-watchers will be looking out for GlaxoSmith-Kline’s response to speculation it might be in the running to snap up Boots’ healthcare division, when it reports on its first quarter on Wednesday. They will also want news on manufacturing issues at its Puerto Rican plant that led US regulators to enforce the withdrawal of two drugs. The City consensus for GSK’s pre-tax profits is $1.54bn against $1.46bn last time.
The update will come on the same day as first-quarter results from rival AstraZeneca. A consensus based on ten analysts sees operating profits rising to $1.31bn in the three months to 31 March, compared with $1.05bn last time.
Leisure group Whitbread has outperformed the targets it set for its overhaul by announcing the sale of its Marriott UK hotels business in a deal that will bring in more than £1bn over two years. The move will see £400m returned to shareholders via a special dividend.
But fund manager Gerrard said its operating performance will have been hit by factors such as weaker trading at Marriott and a slowdown at David Lloyd Leisure. It believes the group is unlikely to have sustained double-digit earnings growth in the second half of its financial year. Annual pre-tax profits, to be reported on tomorrow, are likely to come in at £275m against £249m last time, it said.
CITY LOOKS FOR GROUP TO PACK A PUNCH
ANALYSTS are hoping pubs group Punch Taverns will follow in the footsteps of other companies in the sector by reporting upbeat half-year results on Thursday.
The figures will be the company’s first to include the Unique Pub Company’s estate, which Punch bought in September, virtually doubling its size.
Broker Charles Stanley said: "Given the recent merger and acquisition activity taking place within the sector, we expect to hear further comment with regard to possible developments, both for Punch Taverns and the sector as a whole."
Stanley expects Punch to report pre-tax profits of £84.8 million in the six months to end-February, against £73.8 million in the same period a year ago.
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