Half-year figures from supermarket chain Morrisons will give the City food for thought this week as investors hope its run of profits warnings comes to an end.
Companies in the support services and technology sectors are also scheduled to update the market on trading.
Supermarket chain Morrisons has warned on profits so often since its £3bn takeover of Safeway that investors will be approaching its interim results announcement on Thursday with some trepidation.
The company has already told the market that it only expects to make between £50m and £150m in pre-tax profits this year, leading many brokers, including Barclays, to look for a surplus of just £25m at the half-year stage.
Clive Black, of stockbroker Shore Capital, expected like-for-like sales at core Morrisons stores to have fallen by 2% before accounting for demand for petrol, although converted Safeway branches should have risen by as much as 15%.
His view was that Morrisons stores looked dull and an updated design in Glasgow was sterile, while former Safeway outlets were too small to take its Market Street concept selling fruits and vegetables.
While this could prevent Morrisons from boosting margins sufficiently to secure a long-term revival in its share price, Black hoped the results would at least draw a line in the sand.
Faced with a weaker market and the distraction of last year’s Marks & Spencer takeover saga, retail entrepreneur Philip Green is expected to reveal a subdued set of annual results for his Top Shop-to-Miss Selfridge empire on Thursday.
Last year Green and his family received a £460m dividend after clearing borrowings at Arcadia and seeing operating profits rise by 30% to £296.3m.
Much of the improvement came from work on the company’s supply chain, particularly the speed at which new clothes arrive on the market.
Privately-owned Arcadia is likely to reflect the performance of Bhs, Green’s other business which announced this week that both profits and sales had fallen in the year to April 2. On top of tough trading conditions, Arcadia is now also facing the impact of a resurgent M&S.
Support services specialist Mouchel Parkman announced in July that its order book had reached the £1bn milestone on the back of contract wins with the likes of Yorkshire Water, North East Lincolnshire Council and United Utilities.
Shares in the company have more than doubled since the merger of
Mouchel and Parkman in 2003 and analysts are expecting the good news flow to continue on Tuesday with the announcement of its final results.
The consensus in the City is for pretax profits of £26.7m – up from £23.5m a year earlier – and 10% higher revenues of £341.3m.
Mouchel Parkman bought ServiRail in May and analysts will hope for a positive update on its integration and the opportunities to secure work on renewing signalling systems for Network Rail.
Chip designer Arm Holdings disappointed investors in July by forecasting lower than expected full-year US dollar revenues following weakness in royalty income.
Problems for the Cambridge-based firm are concentrated in its physical intellectual property division (PIPD), formerly known as Artisan, which fell by $2.1m in the second quarter.
Barclays analyst Daniel Krimholtz said there should be some recovery here and predicted Arm would post third-quarter profits of £13.5m on Tuesday – up slightly on the £13.3m seen at the same stage of last year.
ARM employs nearly 800 staff and gains royalties when other companies use its chip designs, which are found in devices such as iPod digital music players.
Investors will be interested to see how well housebuilder Bellway has weathered the slowdown in the housing market when it announces its full year results on Tuesday.
The Newcastle-based firm is hoping to deliver record full year profits in line with market expectations for the 12 months to the end of July after an 18.5% rise in pre-tax profits to £91.7m in the first half.
In a trading statement in August, the company reported a 6% increase in sales in the year to 7,001 and a 2% increase in average selling price to £165,000.
Analysts are forecasting pretax profits to be between £216m and £220 million, up from £205.5m last year.
The struggling retail sector will be in focus on Thursday when discount firm Instore delivers its interim results.
Instore, formerly Poundstretcher owner Brown & Jackson, reported a 2.7% fall in like-for-like sales in the 21 weeks to July 23, although revenues were up 3% in the final eight weeks of that period.
The improvement came as garden furniture ranges sold out and the company’s new distribution centre in Huddersfield ensured stock was available for replenishing its larger stores.
Despite the improvement, analysts forecast Instore to make losses of £3.8m for the six months to the end of August on the back of the fall in like-for-like sales, compared with losses of £2.8m last year.
References: EGi News 17/10/05
