Utilities keeping the noise down

STOCK MARKETS - THE WEEK IN VIEW

Stock performance is likely to be mixed this week as investors wade through a flood of company earnings. Fiscal 1997 earnings from the likes of United Utilities, Anglian Water and engineering group Siebe could also give London's FT-SE 100 Index the impetus to climb to record highs.

United and Anglian Water are expected to be the subject of the new Labour government's proposed multi-billion pound windfall tax on the "excess profits" of former government-owned companies.

"The utilities will be in the spotlight and may not want to appear too bullish about their prospects given the present political climate," said Job Curtis fund manager at Henderson Investment Management, referring to the proposed tax.

United Utilities, the country's largest water company and also one of the Britain's biggest electricity companies, is expected to report a 79.3 per cent increase in pre-tax profit to pounds 489.5m from pounds 273m a year earlier. Earnings per shares are likely to be up 65 per cent at 82.1 pence a share.

United Utilities' report may eclipse Anglian Water's profits, which are scheduled for release on Wednesday. Anglian, the fourth-largest water company by market capitalisation, will report a fiscal 1997 pre-tax profit of some pounds 254.4m, up 2.7 per cent from a year earlier.

Britain's second-largest engineering company will report 1997 results on Thursday. Siebe, a maker of electronic switches and control devices, is set to reveal fiscal 1997 pre-tax profit of pounds 418m, an increase of 26.3 per cent over the previous year. Investors will also be on the look-out to see if a rival will emerge to bid against Siebe for APV. Siebe has agreed to buy the food processing equipment maker for pounds 345m.

Investors will be wary of the possible impact of the pound. Siebe makes more than half its sales in North America, and Europe outside the UK.

Leading institutional shareholders who run index funds are likely to buy heavily into Gallaher, the Silk Cut to Benson & Hedges maker which makes its stockmarket debut on Friday. For Britain's largest cigarette company is expected to shoot straight into the benchmark FT-SE 100 index of top companies.

"The attention next week will focus on Gallaher coming to the market," said Job Curtis. "But I think the overall market is going to go sideways."

Copyright: IOS & Bloomberg