Thursday preview: BT, Thomas Cook, KESA

13th May 2009 15:54

Expectations of massive write-downs, pension shortfalls, job cuts and a slashed dividend should make sure that embattled telecommunications colossus BT will feature prominently on the TV news tomorrow as well as the financial pages of the press when it declares full-year results.A maintained dividend by BT would mean the shares are currently yielding around 16.5%, so the market is telling us that the company will cut its dividend, but opinions differ on the size of the cut.The consensus among investment analysts is for the final dividend to be chopped from 10.4p to 1.73p, giving a total dividend for the year of 7.13p, down from 15.1p the year before. This would still give a still suspiciously large dividend yield of 7.7%, which suggests that the market believes investment analysts are being overly optimistic. Goldman Sachs believes BT will cancel its final dividend altogether, and pass on paying on next year's interim dividend too.BT is under pressure to cut its dividend because of its enormous pension fund deficit. The triennial review of the pension fund is due and forecasts for the shortfall range from an eye-watering £5bn to a wallet-emptying £10bn.On top of its pension problems, BT has to reduce debt and fund the future expansion of the business, while simultaneously sorting out the basket case that the Global Services division became last year. At the time of its third quarter results, BT warned that there may be further lumpy one-off charges in the fourth quarter as a result of the review of finances and contracts at the Global Services division, which provides IT services for corporate customers.With all the doom and gloom, it is easy to forget that the former nationalised industry still enjoys a dominant market presence in Britain with expected full-year revenues of £21.5bn. Pre-tax profit predictions are harder to pin down, given expectations of huge write-downs relating to the Global Services division, which is expected to be restructured, resulting in between 5,000 and 10,000 job losses.Holiday firm Thomas Cook reports interim results which, given the seasonal nature of the business, will see the company in the red, probably to the tune of about £120m.Of more concern to investors is whether the head of steam built up in bookings in March has been maintained. There are some signs that returning consumer confidence could persuade people to abandon plans to holiday in the UK this year and hop on a plane instead, but against this, long term weather forecasts for the UK suggest Britain is in for a hot summer after the wash-outs of 2007 and 2008.Concern over the H1N1 flu virus - 'swine flu' to you and me - has abated of late and although it is likely to have had some impact on Thomas Cook's business, it is unlikely to have been material.In its trading statement in March, analysts were expecting the company to downgrade its profit guidance for the full year but it declined to do so, maintaining a confident outlook. The same analysts are poised with the red ink at the ready to downgrade forecasts at the merest hint of a softening of management's confidence.Consumer electricals retailer KESA issues a pre-close update. Singer Capital Markets is expecting a 7% like-for-like (LFL) decline in sales at French chain Darty and a 9.5% LFL slide at Comet, but concedes these forecasts may be overly pessimistic given recent trading updaters from retailers which suggest the UK consumer has not completely forgotten where the edge of town trading estate is.INTERIMSEuromoney, Titon Holdings, Thomas Cook GroupINTERIM DIVIDEND PAYMENT DATERenewable Energy GenerationINTERNATIONAL ECONOMIC ANNOUNCEMENTSInitial Jobless Claims (US) (13:30)Producer Price Index (US) (13:30)ECB Monthly Report (EC) (09:00)FINALSBTG, BT Group, Datatec (DI), Invensys, Luminar Group, National Grid, SABMillerAGMSAberdeen Growth Opportunities VCT 2, Anglogold Ashanti, Axis-Shield, Balfour Beatty, British Polythene, Cadbury, Cookson Group, Fidelity Japanese Values, Frenkel Topping, Huntsworth, Inchcape, Ingenious Entertainment VCT 1, Ingenious Entertainment VCT 2, Ingenious Live VCT 2, IS Solutions, ITV, Ladbrokes, Lancashire Holdings, Marshalls, Melrose, Parity Group, Prudential, RTC Group, Telecity Group, Tullett Prebon, Vane Minerals, Venture ProductionTRADING ANNOUNCEMENTSAvis Europe, Balfour Beatty, British Polythene Industries, Cadogan Petroleum, Cookson Group, Hikma Pharmaceuticals, Inchcape, ITV, John Menzies, Kesa Electricals, Melrose, Parity Group, Prostrakan Group, Sinclair Pharma, Yule CattoFINAL DIVIDEND PAYMENT DATESperati (Ca)QUARTERLY RESULTSPrudential, Axis-Shield, Tullett Prebon