Thursday preview: Dixons, Future, GDP ... but not Thos. Cook
In some ways, Thursday’s results agenda is dominated by a company which now won’t be issuing its figures this week: Thomas Cook. The company yanked its results announcement scheduled for Thursday while it holds another round of emergency talks with its bankers to winkle out some more cash to tide it over the bleak mid-winter period.
That leaves Dixons Retail as the company result on Thursday that has the best prospect of interesting the man in the street, especially if that man is drawing up his Christmas “want-list” of electronic gadgets.
Credit Suisse is forecasting a half-year “clean” loss before tax of £22.6m, or a loss of £30.8m including property losses. The UK & Ireland division is tipped to post a loss of £10.4m, much the same as it did at the interim stage last year, while the Swiss broker thinks Other International losses will balloon to £21.8m from £7.8m last year.
“We expect the market to take a cautious view on Dixons' outlook until it has traded though the peak Xmas period although we believe the main issue here has been a deteriorating Southern Europe landscape with UK business profitability underpinned to a degree by ongoing cost containment and LFL [like-for-like sales] improvement,” the broker said in a research note in which it cut its target price for the Curry’s and PC World owner to 25p from 27p.
“We forecast H1 [first half] UK LFL of -7% (-10% in Q1), Nordics +2% (+4% in Q1), Other International -15% (-16% Q1) and group gross margins down 80bp [i.e four-fifths of a percentage point],” the broker added.
Nomura notes that a challenging first quarter for the infamous seller of warranties on electrical goods has been followed by an uncertain trading environment in which consumers have been reluctant to splash the cash. “UK LFL weakness may have been offset by an ongoing focus on costs (such as new staff scheduling systems), as indicated at the preliminary results. In our view, despite a forecast -7.3% 1H UK LFL, we expect a relatively stable 1H EBIT [earnings before interest and tax] of -£12.2m (vs. -£10.7m in 1H 10/11),” the Japanese broker said.
“As indicated at 1Q [first quarter], Italy and Greece remain key headwinds for the group. We anticipate 1H/FY [first half/full-year] losses to increase for both regions, and combining with sub-scale losses in Turkey/Central Europe, we forecast International losses to be £21.5m vs. £11.4m last year. Overall, we expect a 1H group loss [before tax] of £29.7m, weakened by a reversal in e-commerce year-on-year,” Nomura added.
Special interest publisher Future is not expected by Altium Securities to spring any surprises in its full-year results on Thursday, following a reiteration of guidance at the time of October’s senior management change.
Market consensus is for profit before tax of £5.1m on sales of £143.7m. Altium thinks the focus will be on the company’s plans for the current year, and how it intends to tackle the problematic US market. “Whether the dividend is maintained is also a key issue. The latter currently gives rise to a 10.5% yield, but cover is low and there is an argument that the cash involved could be better utilised paying down debt and accelerating the transition from print to digital products,” Altium suggests.
Switching to the economy, revised UK gross domestic product (GDP) figures for the third quarter are due out, though the expectation is many circles is that the provisional estimate of 0.5% growth quarter-on-quarter and year-on-year will be reiterated.
“While 0.5% quarter-on-quarter expansion in the third quarter clearly markedly overstates the underlying strength of the UK economy, there is little reason to believe that the growth rate will be revised significantly,” writes Dr. Howard Archer of the forecasting unit, IHS Global Insight.
“It is evident that there was a boost to growth in the third quarter from the making up of activity that was lost to a number of “one-off” disruptive factors that limited second-quarter GDP expansion to just 0.1% quarter-on-quarter (working day lost to Royal Wedding, manufacturing supply-chain disruptions resulting from the Japanese tsunami, money spent on Olympic ticket sales but not yet counting towards growth etc),” the good doctor opines.
Dixons Retail, Helical Bar, Latham (James), PayPoint, Pennon Group, Severn Trent, Young & Co's Brewery 'A' Shares
INTERIM DIVIDEND PAYMENT DATE
Collins Stewart Hawkpoint, Hansteen Holdings
INTERNATIONAL ECONOMIC ANNOUNCEMENTS
IFO Business Climate (GER) (09:00)
IFO Current Assessment (GER) (09:00)
IFO Expectations (GER) (09:00)
Antofagasta, Frutarom Indstries Ltd.GDR (Reg S), London Mining
Future, Grainger, Phytopharm
Economic Lifestyle Property Inv Co Ltd., JSC Acron GDR (Reg S)
eServGlobal Ltd., Hangar 8, Impax Asian Environmental Markets, Leyshon Resources Ltd., Netcall, Ruffer Investment Company Ltd., Wildhorse Energy Ltd. (DI)
UK ECONOMIC ANNOUNCEMENTS
CBI Distributive Trends Surveys (11:00)
CBI Industrial Trends Surveys (11:00)
GDP (output, income & expenditure) (09:30)
M4 Money Supply (estimate) (09:30)
M4 Sterling Lending (estimate) (09:30)
Trends in Lending (09:30)