Tuesday preview: Vodafone finals, UK inflation

Deutsche Bank has pencilled in earnings before interest, tax, depreciation and amortisation of £11.7bn in the year ended 31 March 2016, down from £11.9bn a year earlier.

Revenue is forecast to drop to £41.2bn from a previous £42.2bn due to ongoing declines in Europe.

However, Deutsche Bank expects to see improvement fourth quarter organic service revenue (OBR), the core metric for Vodafone’s mobile operations, as the company attracts more customers to its 4G contracts. The bank predicts 1.6% OSR growth in the last three months of the fiscal year, up 20 basis points (bp) on the third quarter.

“…Europe should be flat (0.0%), up from -0.6% in the third quarter and Africa Middle East and Asia Pacific should improve by 20bp to 6.7%. We expect two of Vodafone’s largest markets (Italy and Germany) to return to positive growth this quarter,” Deutsche Bank analysts said.

The analysts said the key risks to Vodafone’s annual results are competition from the UK and India. Although, the bank said it was optimistic that the secular growth of mobile data has “further to run without negative capital consequences”.

Meanwhile, on the macroeconomic data front UK inflation will be in focus on Tuesday.

Economists expect the consumer price index slowed to 0.3% month-on-month growth in April from 0.4% in March. On the year, CPI is estimated to remain at 0.5% increase, well below the Bank of England’s 2% target.

Core inflation, which excludes volatile items such as fuel and food, is expected to slow to 1.4% year-on-year from 1.5%.

“Consumer price inflation is expected to have edged down in April as a consequence of an unwinding of significant price increases in March that were the consequence of the earlier Easter this year (in particular, air fares),” said Howard Archer, chief UK and European economist at IHS Global Insight.

“However, this is expected to have been partly countered by some upward pressure from increased petrol prices and also possibly a firming in food prices.”

Archer said CPI is likely to hover around 0.5% in the near-term before gradually moving upwards during the second half of the year on an improvement in oil prices and a renewed pick-up in earnings from April’s introduction of the National Living Wage.

“Consumer price inflation is seen only reaching 1.0% in the fourth quarter of 2016 and 2.0% in late-2017,” Archer said.

Tuesday 17 May

INTERIMS
Enterprise Inns, Greencore Group, Lakehouse, Zytronic

INTERNATIONAL ECONOMIC ANNOUNCEMENTS
Balance of Trade (EU) (09:30)
Building Permits (US) (13:30)
Capacity Utilisation (US) (14:15)
Consumer Price Index (US) (13:30)
Housing Starts (US) (13:30)
Industrial Production (US) (14:15)

FINALS
BTG, DCC, Land Securities Group, Premier Foods, Vodafone

SPECIAL DIVIDEND PAYMENT DATE
Lloyds Banking Group

AGMS
Aldermore Group, Burford Capital , Cenkos Securities, Charles Taylor, EG Solutions, Globaldata, Hill & Smith Holdings, Journey Group, Kakuzi Ltd., Metminco Ltd., Mi-Pay Group, Polymetal International, Regus, Rockhopper Exploration, S&U, Sportech, Standard Life

UK ECONOMIC ANNOUNCEMENTS
Consumer Price Index (09:30)
Producer Price Index (09:30)
Retail Price Index (09:30)

FINAL DIVIDEND PAYMENT DATE
Aviva, Lloyds Banking Group, Sagicor Financial Corp., Wood Group (John)

FINAL EX-DIVIDEND DATE
Telefonica SA