The week ahead

Updates from a clutch of blue-chip companies should grab the attention this week as analysts get their clearest guide yet to trading so far in 2003.

As with rival Shell, which also reports results this week, BP’s first quarter results on Tuesday are expected to show the benefits of strong oil prices during a period which saw the run-up to war in Iraq and tension in Nigeria.

Profits figures, which last year crumbled 57% to 1.58 billion US dollars because of lower oil and gas prices, seem likely to follow prices upwards.

Fund manger Gerrard’s is expecting pre-tax profits of around 3.63 billion US dollars (£2.28bn) this time. While BP did not give any indication of production growth in its recent trading update, analysts expect growth of just over 3%.

Soaring oil prices are also expected to help energy giant Shell to a strong set of first quarter results on Friday. The rise, coupled with expected improved margins in its refining business, should help recover some lost ground after falling oil and gas prices and the slowing economy took first quarter profits down 48% last year to 1.99 billion US dollars.

Analysts are forecasting a figure of 3.72 billion US dollars (£2.34bn) this time but production growth, excluding the impact of the Enterprise Oil acquisition, is expected to be flat.

Leisure giant Whitbread’s portfolio of hotels and restaurants, which include Travel Inns and Beefeater, should help shield it from the worst effects of the economic downturn as its appeal stretches across different markets.

The well-documented problems in the hospitality and tourism industry have hit the upper end of the market worst and Whitbread’s full-year results on Wednesday. are expected to bear this out.

Analysts anticipate a weaker performance from Whitbread’s upmarket Marriott hotels but a strong showing from the Travel Inn chain. Meanwhile, mixed performances are expected from its restaurants as the City looks for a moderate rise in the group’s full-year profits from £213 million to £222 million.

Last month consumer goods giant Unilever told the market that it expected sales from its 400 leading brands – which includes household names such as Hellmann’s mayonnaise, Lipton tea and Knorr soups – to rise by around 4-5% in the first quarter. It said the figure was in keeping with its wider targets for the year – which put leading brand growth between 5 and 6% – but reflected calendar factors such as a later Easter.

But advertising and promotional spending is expected to have increased and interest charges are expected to rise as analysts forecast first quarter pofits will be down slightly on Friday from £867 million to £861 million.

Chemicals and paints group ICI will begin the task of restoring its battered reputation on Thursday following the shock profits warning that sent shares tumbling by as much as 39% last month.The company is due to issue first quarter figures but has already warned that problems at its Quest food flavouring and National Starch businesses will have reduced profits on a year earlier by £16 million to £50 million.

It is unlikely that new chief executive Dr John McAdam will have had sufficient time to devise a new strategy, although analysts will be looking for signs that ICI has put the worst of the problems behind it.

Pharmaceuticals group GlaxoSmithKline’s first quarter figures on Wednesday are likely to have been impacted by the weakness of the US dollar and generic competition to its Augmentin anti-bacterial drug.

A below-average flu season in Glaxo’s key European and North American markets has resulted in poor weekly prescription data for Augmentin, fund manager Gerrard’s said.

However, Gerrard’s is still looking for Glaxo to improve pre-tax profits in the period to £1.66 billion from £1.59 billion a year earlier. That is despite costs edging up as the realisation of further merger benefits is offset by additional development costs.