Thursday preview: Barclays, Aviva, RSA, BoE rate decision

4th Aug 2010 17:32

On what may well be the busiest day of the year for company results the likes of Aviva, Barclays, Cobham, Randgold Resources, Rio Tinto, RSA Insurance, Schroders, Smith & Nephew and Unilever will be wrestling each other for prominent coverage.Investment analysts will be waiting to see whether Barclays' investment banking arm, Barclays Capital (BarCap), for so long the engine of growth at the high street bank, will have improved on its disappointing first quarter performance - though "disappointing" is a relative term given the division grew profits by 62% year on year in the first quarter.Charles Stanley notes that "on 30 June, Barclays highlighted that the trends underlying its performance in Q2 [second quarter] had been similar to Q1 apart from the fact that Investment Banking market conditions in May and June had been softer, in particular reflecting lower levels of capital markets and M&A activity."Conditions in Barclays Corporate in Spain had also worsened reflecting continued downward movements in real estate valuations.Citigroup thinks the reaction to the end-June trading statement may have been overdone. "We believe that the top-line revenues of Barclays Capital will hold up much better than the industry average," the US bank said. Insurance giant RSA issues first half results and Charles Stanley will be looking at the interims to see whether "despite the Chilean earthquake and some poor weather in the UK, Scandinavia and Ireland, the group still expects to deliver a combined operating ratio of around 95% in 2010."Sector peer Aviva also declares interim results, having stated in May that it grew sales for the second successive quarter as its core life and pensions businesses in the UK and Europe pushed ahead. "However, the stock market has been less supportive of sentiment in the second quarter and we wait to see whether this has had a detrimental impact on Q2 [second quarter] sales," states Charles Stanley.Panmure Gordon predicts that market consistent embedded value (MCEV) operating profit will be down 2% year on year to £1,657m. International financial reporting standards (IFRS) operating profit is tipped by the broker to grow by one-tenth to £1,154m.Panmure Gordon thinks the interim dividend may be increased by 5% to 9.44p."As with other life insurers reporting, we expect a shift of emphasis away from Embedded Value reporting towards IFRS and net cash generation. We believe that Aviva is fast moving on to the front foot and, given some of the obvious issues at Prudential, will become the preferred play among large-cap UK life insurers," Panmure Gordon said.The focus in defence firm Cobham's interim figures is likely to be on whether the US pipeline is delivering fast enough to enable the company to hit full-year revenue guidance. Its defence and security businesses started the year more slowly than anticipated due to delays in the award of certain US military contracts, but the firm did end the first quarter with a marginally improved order book from end-2009 levels.The company "remains confident of maintaining high single-digit growth (7%- 9%) over the medium term even in a weaker defence spending environment as it benefits from leading edge technologies in areas of key defence priorities (cyber security, surveillance and intelligence), national security and faster growing geographies (India and the Middle East). Around 62% of group revenue originates from the US, which is expected to remain the biggest market in the medium-term," notes Charles Stanley. The broker predicts interim pre-tax profit of £111m, down from £141m at the interim stage last year. The dividend is seen rising to 1.6p from 1.5p. On the economic front the big event in the UK is the interest rate decision from the Bank of England, though all of the excitement is likely to take place behind closed doors as members of the Monetary Policy Committee (MPC) argue the toss over the requirement, or lack thereof, to rein in inflation.Even though better than expected quarter-on-quarter growth of 1.1% in UK gross domestic product (GDP) has given the committee some wiggle room in terms of hastening what is seen as an inevitable hike in the rate, the smart money is still on the MPC voting to stick with the status quo.The previous two meetings have seen one MPC member, Andrew Sentance, vote for a small increase but there is no indication yet that he has succeeded in persuading any of his colleagues round to his view, even though most, maybe all, members are probably uneasy about the inflation rate showing little indication of moving back down to the target rate of 2%. The unexpectedly robust GDP figures have almost certainly killed off any lingering prospect of a revival of the Bank of England's quantitative easing programme. The minutes of the July MPC meeting revealed that the committee had debated the case for both a modest easing and a modest tightening in monetary policy.INTERIMSAviva, Barclays, BBA Aviation, Capital Shopping Centres Group, Cobham, Endeavour International Corp, Ferrexpo, Fiberweb, Hardy Underwriting Bermuda, Ladbrokes, Lancashire Holdings, Millennium & Copthorne Hotels, Nestor Healthcare, Novae Group, Novo-Nordisk AS 'B' Shares, Ote ADS, Planet Payment Inc., Rio Tinto, RSA Insurance Group, Schroders, Smith & Nephew, Spirent Communications, UnileverINTERIM DIVIDEND PAYMENT DATETHB GroupINTERNATIONAL ECONOMIC ANNOUNCEMENTSContinuing Claims (US) (13:30)ECB Interest Rate (EU) (12:45)Factory Orders (GER) (11:00)Initial Jobless Claims (US) (13:30)Q2Aviva, Lancashire Holdings, Ote ADS, Randgold Resources, Smith & Nephew, UnileverGMSVyke CommunicationsFINALSAquarius Platinum Ltd.ANNUAL REPORTDart GroupIMSSAvon, Metric Property Investments, Victrex EGMSTroy Income & Growth TrustAGMSC&C Group, Focus Solutions, Invesco Asia Trust, Schroder UK Growth Fund, Schroder UK Growth Fund Subscription Shares, Sofia Property Fund LimitedTRADING ANNOUNCEMENTSBellway, Highland Gold & Mining, IndigovisionUK ECONOMIC ANNOUNCEMENTSBoE Interest Rate Decision (12:00)Halifax House Price Index (09:30)FINAL DIVIDEND PAYMENT DATEBurberry Group, Charles Stanley, Dairy Crest Group, De La Rue, Mckay Secs., Victoria