The Week Ahead: Kingfisher needs something to sing about
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Your support makes all the difference.With so much news from the retail sector - both good, in terms of takeovers and corporate activity, and bad, in terms of declining high street spending on both sides of the Atlantic - it is tough to guess what the reaction to Kingfisher's results tomorrow might be.
Last month, Kingfisher alerted the market to sales declines at its biggest stores, the do-it-yourself retailers B&Q in the UK and Castorama in France, although the trading update was no worse than expected.
The world's third-largest home improvement retailer might expect some tick up in sales during the first quarter of 2006, as more homeowners take on improvement projects in the first few months of the year than in the run-up to Christmas. Its rival Wickes gave the stock a boost two weeks ago by reporting improved February sales and most analysts are expecting the same from Kingfisher. The statement accompanying the numbers is likely to cause some frayed nerves among shareholders - if sales have not improved, the stock could take a hammering.
With analysts pencilling in pre-tax profits of £441m, there should be no nasty shocks in the numbers themselves. But with several potential bidders waiting in the wings, Kingfisher will have to make some reassuring noises if it is to keep the wolves at bay.
TODAY: Strong equity markets and a surge in AIM flotations should mean a good year for the broker Collins Stewart Tullett, and rumours of a bid from the US investment bank Bear Stearns have sent the shares to an all-time high. But a rash of defections last year and increasing competition in the inter-dealer broking market could take the gloss off the numbers, with analysts forecasting pre-tax profits of about £95m.
Results: Full year - Abbot Group; Collins Stewart; Enterprise; Forth Ports; Michelmersh Brick Holdings; Regus Group; Titan Europe; Vindon Healthcare; WIN. First half - Aero Inventory.
TOMORROW: Weir Group, the Glasgow-based manufacturer of industrial pumps, should be in good form at the moment, with its focus on the booming oil, gas and mining sectors. The broker Williams de Broë is looking for pre-tax profits of £61m and expects the company to produce a strong outlook statement with the numbers, but warns shareholders to look for reassurance over the US market.
RAB Capital, the hedge fund manager, has made strong returns on its flagship Special Situations Fund, also listed on AIM, on top of total funds under management increasing by 50 per cent during 2005. The company expects to report pre-tax profits in excess of £25m.
The property development and investment group Derwent Valley has performed strongly in the past 15 months, adding more than 50 per cent to its share price. The investment bank UBS has a net asset value forecast for the end of 2006 of 1,462p, but with the shares trading at closer to 1,750p Derwent will require a strong performance and an upbeat statement if it is to maintain that premium.
Results: Full year - Celoxia Holdings; Colliers CRE; Cyan Holdings; Derwent Valley; Dignity; Entertainment Rights; Hardy Oil & Gas; John Menzies; Kingfisher; Property Recycling; Punch Graphix; RAB Capital; ROK Property Solutions; TV Commerce Holdings; Weir Group; Wellington Underwriting. First half - Wolseley.
WEDNESDAY: Having turned down a bid worth 325p per share last week from a private-equity consortium, Kesa Electricals will need to report a strong set of results to justify that decision. Kesa, which owns Comet and Darty, has a strong asset base and should benefit from increased "white goods" spending in 2006 on the back of this summer's World Cup. Williams de Broë reckons Darty is worth the share price on its own, and is looking for pre-tax profits of £147m.
Results: Full year - Alkane Energy; Evolution Group; F&C Asset Management; Hardy Underwriting; Huntleigh Technology; IQE; Kesa Electricals; Omega International; Slough Estates; Ted Baker.
THURSDAY: The integration of Safeway took longer and caused more pain for WM Morrison than it expected. The £3bn takeover, finalised in March 2004, resulted in profit warnings, job cuts and staff strikes, but a recent trading statement showed sales at the 220 former Safeway stores were up by 9 per cent in the eight weeks to 8 January, and analysts will be looking for more evidence that its troubles are now firmly behind Morrison. Expect to see full-year profits of £61m.
Results: Full year - Augean; Capital & Regional Properties; Churchill China; Friends Provident; KBC Advanced Technology; Next; Premier Oil; Prostraken Group; ServicePower Technology; SmartFocus Group; Songbird Estates; WM Morrison Supermarkets. First half - Primary Health.
FRIDAY: Results: Full year - House of Fraser; Northern Racing; Robinson; SPI Lasers.
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