Tuesday preview: Whitbread, BHP and public sector borrowing in focus

UK public sector debt figures follow a smattering of corporate results first thing in the morning from the likes of Whitbread, BHP Billiton and St James's Place.

Premier Inn and Costa Coffee owner Whitbread last updated on trading for the nine months to the start of December, when like-for-like revenue per available room was -0.6% at Premier Inn and LFL sales growth for Costa was +3%.

The consensus forecast is for the FTSE 100 group to serve up pre-tax profit of £554m.

UBS analysts expect £1.37bn of revenues from Premier Inn, £563 from pub restaurants and £1.17bn from Costa, leading to PBT pre-pension of £575m, adjusted earnings of 247.5p and a dividend of 92.8p per share.

Numis said there was scope for revpar growth of 5-6% in for Premier, taking the FY total to 1.6%, while it sees Costa with LFL sales growth of 2% as it recently hiked coffee prices twice.

BHP Billiton's third-quarter results are likely to gain some more attention after it recently came under attack from American activist hedge fund Elliott, which is calling for the abandonment of its dual share structure, a spin-off of the US petroleum business and share buybacks.

"BHP Billiton is resisting but Elliott’s track record suggests it won’t go away quickly so the miner’s boss Andrew Mackenzie needs to show some strong operational performance," said AJ Bell, noting that for the full year BHP is targetting petroleum down 15%, copper up 3%, iron ore up 3% and metallurgical coal up 2% with thermal coal down 12%.

Following a very strong finish to 2016, first-quarter results from St James's Place are expected to show a continuation of this momentum, helped by the company starting 2017 with 10% more qualified advisers
than a year ago, Barclays pointed out.

Analysts expect the company to report Q1 sales increase of 16% to £2.8bn, and net flows of £1.5bn, and assets under management increasing 26% year-on-year to £78bn.

Looking elsewhere in financials, the Barclays analysts said it exited the focus at Virgin Money to be on volumes and margin, "and for both to be robust" as the UK mortgage market continued to strengthen into
early 2017.

Numis said its estimates assume net owner occupied mortgage balances grow 10% during 2017 to £27bn, buy-to-let mortgages 10% to £6bn while credit card balances grow 21% to circa £3bn.

"We believe Virgin represents a compelling short-term investment opportunity as the improving operating efficiency should, in our view, underpin significant balance sheet growth for very little incremental cost."

Casting its eye over Elementis, Numis recalled that management provided some grounds for near-term optimism when they pointed to a better operating environment in 2017.

"Therefore, the upcoming Q1 trading update on 25th April has potential to reveal how this has positively impacted the group’s operating performance during this first three months of the financial year. Further, with a wide range of self-help initiatives underway as part of management’s ‘Reignite Growth’ strategy, we will also be looking for evidence of any positive impact from these."

Hammond's debt targets in focus

March's data on public sector net borrowing will contain the first estimate of the full fiscal year outturn on the public finances.

In his recent Budget, Chancellor Philip Hammond revealed the Office for Budget Responsibility was forecasting the deficit will be £51.7bn, implying the government borrowed £3.1bn in March.

"That does not seem out of keeping with previous years, in terms of the proportion of total annual borrowing that is recorded in the last month of the fiscal year," said RBC Capital Markets, noting that it is normal for there to be tweaks to take account of any variance between the initial outturn for the full fiscal year cash requirement and that which was estimated at the time of the Budget.

The headline PSNBx, which excludes financial interventions, was £1.8bn in February and the consensus is for £3.2bn this month.

Barclays forecasts £5.1bn, up £0.9bn compared to March last year as the financial year ends on a weak footing and an overshoot of £1.2bn relative to the government’s target.

Tuesday 25 April

UK ECONOMIC ANNOUNCEMENTS
Public Sector Net Borrowing (09:30 BST)

INTERNATIONAL ECONOMIC ANNOUNCEMENTS
House Price Index (US) (13:00)
New Homes Sales (US) (14:00)

FINALS
Amec Foster Wheeler, Axis Bank Ltd GDR (Reg S), Circassia Pharmaceuticals, Havelock Europa, Minds + Machines Group Limited (DI), OptiBiotix Health, Redstone Connect, Whitbread

INTERIMS
AB Dynamics, Connect Group

TRADING ANNOUNCEMENTS
Apax Global Alpha Limited, Axis Bank Ltd GDR, BHP Billiton, Carpetright, Elementis, St James's Place, Virgin Money

QUARTERLY PAYMENT DATE
General Electric Co

GMS
OMV Petrom S.A. GDR (REG S)

ANNUAL REPORT
OMV Petrom S.A. GDR (REG S)

AGMS
AFC Energy, Electric Word, Elementis, Entu (UK) , Equiniti Group , Foreign and Colonial Inv Trust, Globaldata, Hammerson, Horizonte Minerals, Maven Income and Growth VCT 5, Metro Bank, Premier Energy & Water Trust, Proteome Sciences, Shire Plc, Societatea Nationala De Gaze Naturale Romgaz S.A. GDR (Reg S), SpaceandPeople, Sterling Energy, STV Group

FINAL DIVIDEND PAYMENT DATE
Domino's Pizza Group