AstraZeneca and BSkyB to announce results this week

City heavyweights AstraZeneca and BSkyB will kick off the blue-chip results season in the UK this week, but the major focus will be on figures detailing the performance of the UK economy in the final three months of 2010.

Official figures released on Tuesday are expected to reveal economic growth in the three months to December slowed down once again.

The rate of GDP growth – a broad measure for the health of the total economy - is forecast to come in at 0.4% for the fourth quarter of 2010, compared to 0.7% in the previous three months and 1.1% in the second quarter.

The end of the construction blip – which has boosted growth in previous quarters – and the impact of the snow on economic activity in December are both expected to hit GDP in the quarter.

But Howard Archer, chief UK and European economist at IHS Global Insight, said there was considerable uncertainty over how much December’s severe weather hit overall activity, so the range of forecasts is quite wide, from 0.2% to 0.6%.

But Mr Archer warned dismal retail figures for December could see GDP undershoot his forecast of 0.4%.

While there are still signs of robust growth in the UK, a further slowdown will do little for prospects for the economy over the next year and its ability to withstand the Government’s deficit-busting spending cuts.

British Chancellor George Osborne unveiled an £81bn (€95bn) package of spending cuts - leading to hundreds of thousands of job losses – last year to tackle the creaking public finances.

Mr Osborne has pinned his hopes on the private sector picking up the expected slack in the economy and holding off a double-dip recession.

So a further slowdown in growth in the fourth quarter – which will exclude any further slowdown in consumer spending caused by the VAT hike in January – will be far from welcome.

Philip Shaw, chief economist at brokers Investec, has forecast growth of 0.3%.

He said: “In the second and third quarters of this year, construction provided a positive surprise contributing to quarterly growth. Indicators point towards a tapering off in construction’s contribution.”

“The other fourth quarter story relates to the heavy snow seen in December which is likely to have provided downward pressure on services and manufacturing.”

All the headlines regarding BSkyB in recent weeks have been about its proposed takeover by Rupert Murdoch’s News Corp.

But the satellite broadcaster will attempt to turn the focus back onto its strong performance when it reports interim results on Thursday.

Analysts expect Sky to post pre-tax profits of £454m (€533m) in the half-year, a 27% increase on the previous year, as it continues to win new customers.

Dominic Buch, an analyst at Numis, expects Sky to report a strong second quarter, and predicts it will have recruited another 153,000 customers.

He has pencilled in pre-tax profits of £455m (€534m) as the business reaps the rewards of previous investment in technology, such as high definition (HD) TV.

There has been a series of strong updates from Sky in recent months.

Sky reported that operating profits rose 10% to £855m (€1bn) in the year to June 2010, while bottom-line pre-tax profits rose to £1.17bn (€1.4bn) due to the disposal of shares in ITV.

The following quarter it posted a 25% rise in operating profits to £255m (€299m) and a 15% increase in revenues to £1.5bn (€1.8bn).

The company smashed through the 10 million television customer-mark in November, a target the business set itself in August 2004, when subscriber numbers were at 7.4 million.

The broadcaster, which was launched in 1989, is now found in 36% of households in the UK and Ireland and reaches an estimated 25 million people.

It has extended its offering in recent years to cover high definition television, broadband and home phone services and most recently 3D viewing.

Some 30% of its subscribers now take Sky’s high definition services, twice as many customers as a year ago after 429,000 net additions in the fourth quarter, while one in five customers now have each of TV, broadband and telephony – up 36% on last year.

The group has recently expanded its channel offering, after buying Living TV, and will launch a new channel – Sky Atlantic HD – on February 1, which will screen new series from US channel HBO, as well as the fifth season of award-winning drama Mad Men, which was recently poached from the BBC.

Pharmaceuticals giant AstraZeneca has had a torrid year, which is likely to be reflected in subdued profits growth in its annual results on Thursday.

The group has been hampered by problems with its newest medicines, increased legal costs and greater competition from cheaper rivals.

The company last month revealed it had discontinued its motavizumab drug, used to prevent serious lung disease, leading to a $445m (€327m) accounting charge.

This update came shortly after Astra confirmed there would be further delays in winning approval from US regulators for its heart medicine Brilinta.

The US Food and Drug Administration (FDA) wanted further analysis of research into the blood-thinning pill before clearing the drug for sale.

But the firm announced on Friday it had already responded to the FDA – quicker than analysts had expected – and this could lead to the drug being available in the US sooner than hoped.