Announcements from blue-chip companies are likely to be thin on the ground this week, although results from Majestic Wine and First Choice will still offer useful pointers on the fragile state of consumer confidence.
Tour operator First Choice is expected to post losses of between £35m and £37m when it unveils results for its seasonally quieter first half on Tuesday. The figure will be compared with £39.9m a year earlier.
The group, whose brands include Unijet, Falcon and Sovereign, has reduced dependency on traditional holiday destinations by selling more higher-margin packages, including activity, specialist and long-haul trips.
That strategy has proved profitable at a time of tough trading conditions, so analysts will be hoping for more of the same when Crawley-based First Choice details how many of its summer holidays it has already sold. The higher the number of early bookings, the brighter its margins will look.
One threat could come from the general economic picture after the CBI warned that the slowdown on the high street had spread to the consumer services sector, including previously resilient areas such as cinemas and tour operators.
Results from washroom services group PHS are likely to be overshadowed by ongoing takeover speculation surrounding the Caerphilly-based group.
Reports have linked up to five private equity firms to the £700m valued company, although sector rival Rentokil Initial is thought to have ruled out an approach as it concentrates on getting its own business in order.
The figures on Tuesday from the FTSE 250 Index firm should show why it has proved so attractive, with full-year profits set to improve to £47.5m, from £43.5m a year earlier.
PHS, which has acquired businesses including plant provider Greenleaf and water cooler arm Waterlogic, floated on the stock exchange in 2001 with a market value of £414m and has increased profits every year since then.
Majestic Wine will provide some light relief for the retail sector on Monday as it is expected to unveil a 24% rise in annual profits to £13.1m.
The latest improvement from the chain, which has around 120 warehouse outlets, is likely to be accompanied by a sizeable rise in the annual dividend and a relatively resilient update on the start of the new financial year.
Robert Brent, an analyst at KBC Peel Hunt, said: “Current trading may be affected by the relatively poor weather this year but comparatives are not especially demanding while the dynamics of the business should continue to drive organic sales growth at around 6%.”
Like-for-like sales are likely to have grown by around 7% in the last financial year, with that figure slowing to 6.5% in the second half.
Half-year results from benefits-to-parking software specialist Civica are expected to show how it has been boosted by new laws allowing local authorities to grant licences to pubs and bars.
Civica, which floated on the stock market a year ago, said in a trading statement in April that a number of councils had signed up for software to help them process alcohol licences.
Stockbroker Investec Securities said Civica’s strength was that it has chosen to focus on a few key markets, its niche expertise allowing it to achieve good margins and sign multi-year recurring deals.
However, it has warned the company could come under pressure from reduced local government budgets and pricing pressure as other support service groups enter the market.
Although no forecasts were available for the half-year results on Wednesday, Investec expects full year profits to rise to £10m from £8.3m.
Software company Radstone Technology will unveil full-year results on Tuesday with news of a key US navy contract still fresh in the memories of investors.
The order from Raytheon is worth $26.7m (£14.7m) and means Radstone – a specialist in IT products to the aerospace and defence industry – should be able to announce a record order book of more than £90m.
Analysts at UBS said the contract for software on the US Navy’s premier heavyweight submarine-launched torpedo was worth more than expected, and had helped provide a boost to investor confidence.
The UBS team is looking for annual profits to improve to £8.2m, from £7.4m a year earlier.
A reorganisation at specialist printer Wyndeham Press showed sign of paying off recently after it said in a pre-close statement that profits would be at the top end of expectations.
The firm, which prints titles such as What Car and Marie Claire, has cut overheads and reorganised its operations and sales teams.
Last year’s acquisition of Graphic Facilities has now been fully integrated and is making progress and its target sectors are all growing, according to broker Numis.
Numis believes the company is making significant progress despite trading pressures in the wider printing market as it benefits from its more efficient cost base. Pretax profits are expected to come in at £7.2m on Thursday, up from £2.6m.
References: EGi News 13/06/05
