Big results will signal mood of the consumers
HEAVYWEIGHTS BP, Unilever and GlaxoSmithKline will test fragile investor confidence this week when they publish annual results.
Full-year results from Knorr-to-Dove soap group Unilever will be closely watched on Thursday for any signs of worsening consumer demand amid the global economic downturn.
The group’s last quarterly results were better than expected, with sales growing by 8.3% to September 30.
The rise was largely driven by price increases, but Unilever said sales volumes were also holding up well, up by 0.6%.
Recent figures from other groups selling to consumers suggest the final three months of 2008 will have been more challenging for Unilever, according to analysts at Dresdner Kleinwort.
However, anxieties over the fourth quarter aside, Unilever’s full-year figures are expected to show resilience, with Dresdner looking for pre-tax profits up 2% at £5.27bn.
British Airways results on Friday come a week after its shock profits warning, blamed on the weak pound.
The airline said it expected to report annual operating losses of about £150m after costs rose by more than it had foreseen.
BA blamed the impact of currency movements for an 8% year-on-year rise in non-fuel costs, compared with previous guidance of 5%. It now expects results for the third quarter to December 31 to show an operating loss of £50m, leading to a possible deficit of £150m for the year to March 31.
Britain’s biggest insurer Aviva is the latest in the life and pensions sector to report full-year new business figures on Wednesday.
The firm follows rivals Standard Life, Friends Provident and Legal & General with its sales results in what is clearly a challenging market. L&G has shown most resilience, with strong group protection and bulk annuity sales offsetting a 2% fall in UK life and pensions, to help overall new business rise 3%.
Aviva, which owns Norwich Union – soon to rebrand under the Aviva banner – revealed £600m had been wiped off its capital surplus in less than a month in last autumn’s financial turmoil. Analysts are expecting sales up 6% to £33.5bn for 2008.
Drugs group GlaxoSmithKline, which employs more than 1,200 people in County Durham and Cumbria, is expected to show it has been a clear winner from the pound’s weakness when it posts full-year results on Thursday.
But for GSK on an operational basis, Charles Stanley analyst Jeremy Batstone-Carr forecast results would show a slight drop in underlying sales and earnings compared with 2007 and with foreign exchange movements stripped out. Mr Batstone-Carr is predicting pre-tax profits of £6.86bn in 2008, down from £7.45bn in 2007.
Hot on the heels of Royal Dutch Shell’s European profits record of £22bn, rival BP is expected to weigh in with a surplus of £18.77bn when it reports annual figures tomorrow.
The results will show the benefit of sky-high oil prices at the start of the period, but attention will be fixed on the fourth-quarter performance and BP’s investment plans. Analysts expect pre-tax profits of $3.1bn in the final quarter, against $4bn a year earlier.
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