Thursday preview: Britvic not walking on sunshine

19th Oct 2011 18:07

Soft drinks maker Britvic has probably enjoyed Britain's Indian Summer as much as anybody but it may be one of the few bright spots in Thursday's trading update, as discretionary spend of consumers comes under increasing pressure."We do not feel the current consumer environment bodes well for an environment of upgrades. Input costs, in particular sugar and PET [packaging], remain stubbornly high, and aside from consolidation / M&A [mergers and acquisitions], which management have stated their intentions to actively take part, we cannot see much by the way of a positive catalyst," laments Collins Stewart. "A heightened focus on promotions and supermarket 'price wars' does not bode well for margin growth in this channel over the next 12 months. It was earlier this year that a combination of a lack of pricing power, and rising input costs resulted in a surprise downgrade to profits," Collins Stewart notes. "Since then, the summer in UK & Ireland has been poor but more notably increased competitive activity, have all led to a deterioration in earnings visibility," it added. At the third quarter stage, year-to-date revenue in Great Britain was up 0.7% on last year, and Collins Stewart does not expect the fourth quarter growth to surpass 1%. Newspaper distributor Smiths News is tipped to announce profit before tax of £38m on revenue of £1.75bn on Thursday. Earnings per share of 15.13p have been pencilled in by the investment analyst community while the full-year dividend is expected to rise to 7.80p, which would put the shares on an extraordinary yield of 9.2%, signifying the market's scepticism about the company's ability to maintain this level of pay-out in view of declining newspaper sales.Altium Securities is in line with market consensus with its profit forecast. It expects News Distribution to contribute £37.2m of earnings before interest tax and amortisation while newly acquired Dawson is expected to chip in with £3.8m. "We see possible upside to margin guidance from additional Dawson synergies. Conversely September newspaper ABCs [circulation figures] showed a significant acceleration in the rate of circulation decline for newspapers in both dailies (down 250k on the month, down 7.1% YoY [year-on-year]) and Sundays (down 340k on the month, -16.4% YoY)," Altium observes, adding that its forecast of 4% like-for-like decline in newspaper volumes for the full year "looks potentially optimistic.""The readership gains seen by rival papers in the wake of NOTW's [News of the World's] demise have been somewhat eroded, particularly at the Mail on Sunday which has lost almost all the 328k readers it gained in July post the demise of NOTW. The Dawson deal has not changed the group's strategic direction; management's ambition to pursue diversifying acquisitions has been on the drawing board for at least a year and we will be looking for clear momentum with this," the broker added.INTERIMSSrei Infrastructure Finance Ltd. GDR (Reg S), Suretrack Monitoring INTERIM DIVIDEND PAYMENT DATEHighcroft Investment, Nature Group, RPS Group, Total ProduceQUARTERLY EX-DIVIDEND DATECaterpillar Inc.INTERNATIONAL ECONOMIC ANNOUNCEMENTSConvenience Store Sales (JPN)Producer Price Index (GER) (07:01)Consumer Confidence Indicator (EU) (15:00)Initial Jobless Claims (US) (13:30)Continuing Claims (US) (13:30)Bloomberg Consumer Confidence (US) (14:45)Leading Indicators (US) (15:00)Philadelphia Fed Index (US) (15:00)Existing Home Sales (US) (15:00)Q2Srei Infrastructure Finance Ltd. GDR (Reg S)Q3Hexaware Technologies Ltd. GDS (Reg S)GMSNorthern 2 VCT, Syntopix GroupFINALSDebenhams, Punch Taverns, Smiths News, Spirit Pub CompanyIMSSCairn Energy, Mecom, Petropavlovsk, Promethean WorldAGMSBHP BillitonTRADING ANNOUNCEMENTSBritvic, SABMillerUK ECONOMIC ANNOUNCEMENTSInternet Retail Sales (09:30)Retail Sales (09:30)Trends in Lending (09:30)FINAL DIVIDEND PAYMENT DATECambium Global Timberland Ltd.