Friday preview: Dairy Crest, Electrocomponents, US jobs

3rd Feb 2011 16:48

The Food and Agriculture Organisation (FAO) index of food prices rose to a new record last month, underlining concerns about soaring food costs.Those costs are a worry to Cathedral cheese and Country Life butter producer Dairy Crest, as a rise in input prices will put pressure on margins, unless the company can succeed in passing those increased costs on to customers. Last week dairy group Robert Wiseman said commodity price rises are an issue, with milk suppliers calling for increases in the amount paid for milk. The increase in palm oil prices will also feed through to the cost of producing spreads, while higher oil prices will bump up the cost of packaging. The same issues are surely facing Dairy Crest."A lot of this should be recovered from the major retailers; however it will be the middle ground that could well be problematic," reckons broker Peel Hunt."There has been no let-up in competition at the consumer end. Dairy Crest continues to do an excellent job in marketing its brands, but the pressure for shelf space and need for promotions is intense. Dairy Crest will need cheese prices to be high over the next 18 months, given the increase in raw milk prices. In his letter to producers, Milk Procurement Director Mark Taylor explains the market continues to be fiercely competitive, with all sectors, and consumers in particular, experiencing the severity of the current economic climate (according to milkprices.com)," the broker notes. Given the headwinds the company faces, Peel Hunt rates the shares a "sell".The trading statement from Electrocomponents, the world's largest distributor of electronics and maintenance products, should be a more cheery affair after the company raised profits guidance two months ago. All regions were seeing double-digit percentage gains in revenue growth back in November and analysts will be keen to see whether this rapid rate of growth has been maintained. The increasing importance of online sales might also be in focus.On the economic front, all eyes will be on the US and the first major economic indicator of the month, the change in US non-farm payrolls for January. Economists are expecting an increase of 130,000, compared to December's 103,000 increase.INTERIM DIVIDEND PAYMENT DATEAveva Group, Bisichi Mining, Foresight 3 VCT, Foresight 4 VCT, Jupiter Second Split Trust Geared Shares, Mothercare, Vodafone GroupQUARTERLY PAYMENT DATEInvestors Capital Trust 'A' SharesINTERNATIONAL ECONOMIC ANNOUNCEMENTSPMI Construction (EU) (09:00)PMI Construction (GER) (08:55)Change in Non-farm Payrolls (US) (13:30)Unemployment Rate (US) (13:30)Average Hourly Earnings (US) (13:30)UK ECONOMIC ANNOUNCEMENTSHalifax House PricesIMSSDairy Crest, ElectrocomponentsFINAL DIVIDEND PAYMENT DATEEuromoney Institutional Investor, Next Fifteen Communications, RM, Smiths News