Engineering groups lead field of UK reports this week
Engineering groups will feature heavily in the list of blue-chip companies updating the London market on their latest results this week.
The outcome of a strategic review should dominate the interim results announcement of Rentokil Initial on Thursday, although the troubled group is expected to stop short of recommending a break-up.
Shares in the company have fallen recently on news that the group will hold on to its parcel delivery and conference businesses – rather than sell them for around £600m (€886.7m) and then focus on contract cleaning and pest control work.
Rentokil warned on profits in May and broker Charles Stanley expects the group to report pre-tax profits of £185m (€273.4m) for the first six months of 2004, compared with £201m (€297m) a year earlier.
Engineering group Weir is expected to unveil a rise in half-year profits on Wednesday after last year’s results were restrained by uncertainty caused by the war in Iraq.
Analysts expect the Glasgow-based group to report pre-tax profits of £24.5m (€36m) for the six months to June 30, compared with £23.6m (€34.9m) a year ago.
Weir has experienced improved market conditions over the period with sales ahead in all divisions, but profits from engineering products are set to decline due to higher input costs, pricing pressures and adverse currency swings.
The results may also see Weir offer further information on the discovery of evidence of irregular payments in relation to its work for the oil-for-food programme in Iraq in 2000. Details were first revealed last month.
Housebuilder Persimmon is expected to deliver strong half-yearly results after recently moving to cool fears over the affordability of the new homes market.
The group, which builds more than 12,000 homes a year, said in a recent trading statement that it had a record order book with total sales for 2004 at 10,400.
According to broker Charles Stanley, a 10% rise in property prices is likely to help underlying profits lift to £210m (€311.7m) from £151.7m (€225.2m) tomorrow.
Investors will be focusing on the group’s comments on the autumn property market, with any sign of weakness likely to result in lower volume estimates for the next financial year.
The US industrial upturn should have continued to benefit engineering group Tomkins and the group is expected to report on Thursday that it made profits of £61m (€90.5m) in the six months to June 30, against £57.2m €84.9m) a year ago.
The London-based group is a specialist in parts for the car market and investors will seek an update on the company’s automotive production targets after major carmakers announced their output plans.
According to fund manager Gerrard, sales in the second quarter are expected to have fallen by about 5% in the second quarter and the weak US dollar would have remained a drag as North America accounts for about 67% of revenues.
Analysts are tipping leisure group Hilton to report further profits growth at bookmakers Ladbrokes and more gains by its 400-strong chain of hotels on Thursday.
Within the hotels division, Hilton will be relying heavily on strong growth from London, Europe and Asia. Many rivals have been experiencing a pick-up in occupancy levels and this should also be the case for Hilton, broker Charles Stanley said.
The gaming arm, which drove forward group profits in the first quarter, should have further boosted its gross win following a favourable run of results.
Hilton is expected to post half yearly pre-tax profits of between £165m (€245m) and £175m (€259.8m), compared with £110m (€163m) last time.
Engineering group Invensys is expected to post wider losses when it updates the market on developments for the first quarter of its financial year.
The group said recently that customer confidence was returning and its key markets were showing some encouraging signs as it posted a 76% improvement in annual losses. It also said its financial position had stabilised after the recent completion of a £2.7bn (€4bn) refinancing.
However, fund manager Gerrard is expecting it to post pre-tax losses of £25m (€37m) on Thursday, against a deficit of £2m (€3m) last time, after a seasonally weak period.
Investors will be looking for signs of a turnaround in its core process systems division, where the group has embarked on a restructuring programme.
