Week ahead in UK markets - focus is on banks

Blue-chip stocks will be back on the radar of UK market analysts this week when a clutch of heavyweight companies issues results or trading statements. In particular, the banking sector will be in focus.

Blue-chip stocks will be back on the radar of UK market analysts this week when a clutch of heavyweight companies issues results or trading statements. In particular, the banking sector will be in focus.

Electrical retailer Dixons will draw the line under a difficult year on Wednesday when it reports results for a period that included a shock profits warning issued in the wake of disappointing Christmas sales.

Dixons stuck by those scaled-down expectations in April although analysts are assuming the figures for the year to May 3 will be at the lower end of the forecasts, with fund manager Gerrard looking for profits of £292m (€419m) against £297m (€426.6m) a year earlier.

The group, which is one of a number of companies facing a Competition Commission inquiry into the sale of warranties, should give an update on trading, although last year’s football World Cup will distort comparisons.

Investors will be looking to Stagecoach – owner of South West Trains and a host of overseas operations – for guidance on the future size and shape of the group following a number of disposals in recent months.

The Perth-based company, which will announce full-year results on Thursday, is in the process of streamlining its troubled US operation Coach USA.

Disposal of those and other assets has raised more than US$200m (€171.6m), although those sales came after the financial year-end. Analysts expect profits of £102 million, down on the £107m (€146.5m) reported a year earlier.

Housebuilder Berkeley should remind the City about the robust state of the housing market when it reports annual results on Thursday.

With fund manager Gerrard looking for pre-tax profits of £221m (€317.5m), compared with £196m (€281.5m) a year earlier, Berkeley has benefited from the lack of supply in the market, strong affordability and low unemployment.

Those factors remain in place in the new financial year, although the softening of the London market, where Berkeley is strongly represented, will be a concern despite a strong forward order book and large land bank.

Stocks in the financial sector will be closely watched this week when a clutch of blue-chip banks attempt to follow the lead of Abbey National, which avoided any nasty surprises when it kicked off the reporting season earlier this week.

However, Lloyds TSB’s newly-arrived chief executive Eric Daniels may use the company’s trading statement tomorrow as an opportunity to outline his intentions after a difficult trading period for the high street giant.

The following day, HBOS will come under pressure to show that its loan-book expansion of recent years has not slowed while Alliance & Leicester should report solid progress as it looks to focus on its core strengths.

Analysts tracking consumer products group Unilever are expecting a healthy bounce in second quarter sales growth tomorrow after a disappointing start to the year for the Hellmann’s-to-Knorr group.

Much of the improvement is due to the later timing of Easter, although Unilever will also need to demonstrate that its foods division is back generating improved top line growth.

The trading statement, which will cover the first two months of the quarter, will be an important step in the market’s assessment on whether Unilever can meet its sales targets for the year.

Carnival Corporation – created from the acquisition of P&O Princess by Cunard owner Carnival – will deliver its first set of figures on Wednesday following the merger of the two operations.

The lack of historic data makes forecasts for the second quarter period difficult, although Carnival is likely to have shown some recovery from the start of the year when bookings were hit by war in Iraq and pricing pressures.

An update on cost savings following the tie-up will also be sought, with Carnival recently speaking of its confidence in achieving its target of 100 million US dollars (€85.8m).

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