Thursday preview: Kingfisher, Capita, Astra, retail sales

20th Jul 2011 15:18

Do-it-yourself retailer Kingfisher has become something of a two-speed company, with the UK operations holding back the French business; Thursday's trading update may reveal whether that is still the case. "We expect UK LFL [like-for-like] sales at B&Q to be down strongly in the second quarter, given seasonal sales pull forward, poor weather, a clearance event at Focus following administration and a tough underlying environment. However, with 30 Focus stores set to be converted to B&Qs by the fourth quarter and many others exiting the market, fiscal 2012/13 may see a strong uplift for the group and more than offset short-term weakness," according to Nomura Securities."Despite a top-line slowdown in France in the second quarter relative to the first, we continue to expect positive LFL sales trends. Gross margin initiatives, such as direct sourcing and common product, continue to flow through, while a favourable sterling/euro exchange rate should help offset UK weakness," the Japanese broker added.Matrix Group is expecting a "a slowdown in the rate of sales growth across all three parts of the business (France, UK and Other International), although with some specific second quarter issues and easing comparatives into the third quarter, we expect the slowdown to be temporary."The French business remains the stand-out performer, Matrix asserts, "with 2.6% LFL growth forecast for Q2. France is forecast to provide 49% of retail profits this year."There is no shortage of brokers willing to pontificate on the half-year results of outsourcing giant Capita. Panmure Gordon thinks the firm will rack up revenues of £1,388.7m, up from £1,361.1m last year, implying a 2% growth rate. All of this and more will have been driven by acquisitions, however, in Panmure Gordon's view. On a like-for-like basis, the broker thinks revenues will be down by 3%, as previously indicated by the company."In adjusted PBT [profit before tax] terms we are forecasting £174.2m vs. £163.1m last year, which reflects higher margins of 13.65% vs. 13.11% last year. Consensus is currently £1442.7m for revenues and £176.8m for PBT. If our forecasts are achieved it would imply EPS of 21.4p (consensus 21.95p), which is 11% ahead of the 19.4p delivered last year. We have pencilled in an interim dividend of 7.3p (consensus 7.1p) vs. 6.6p paid last year," Panmure Gordon added.Charles Stanley is forecasting profit before tax of £172m and an interim dividend of 7.2p. . "Clearly, the interim results will show some revenue growth due to acquisitions but organic growth is likely to be mildly negative due to the earlier lull in the order flow. Some recent awards may help to improve sentiment but further contracts in the second half are needed to secure the outlook for 2012, in our opinion," Charles Stanley analyst Tony Shepard said.Shore Capital is of a similar view. "Interim results are likely to show that the negative organic growth rate running at 5% through fiscal 2010 has only moderated to c3% in the first half of fiscal 2011 with growth returning only in the fourth quarter of the current year. We estimate top line growth for the half-year period at c5%, driven solely by acquisitions totalling some £475m over the past 18 months, these add some £534m to our revenue forecast for fiscal 2011."Shore Capital forecasts revenues of £1.425bn with adjusted PBT of c£178m (up9%) and earnings per share of 21.0p (up c8%). It forecasts net debt at June 2010 to be around £1.03bn.Drugs giant AstraZeneca is still recovering from the disappointment of the advisory committee to the US Food and Drug Administration (FDA) giving the thumbs-down to the new drug application for diabetes drug, dapagliflozin, which Astra jointly developed with US peer Bristol-Myers Squibb, but, quick as you like, it has another FDA decision on the way.Citi said AstraZeneca's blockbuster heart drug brilinta has a 60% to 70% chance of approval by the FDA but is contingent on post-marketing studies with a sufficient number of US patients to confirm the benefit with low-dose of aspirin.Nomura points out that, despite receiving EU approval in December 2010, brilinta has made "only limited headway" with first quarter sales of $1m in a $3bn EU market".Matrix, meanwhile, notes: "Brilinta (ticagrelor, blood thinner) has its PDUFA date today; given the negative advisory panel vote yesterday on Dapagliflozin, we believe there will be significant pressure on Astra to deliver, regardless of whether Brilinta is approved or not. We have valued Brilinta at £1.06 in our NPV [net present value] model, with a contribution from US sales of £0.66 (3.8% of our NPV). We have $1.5bn of sales by 2015E. Any negative label would prompt us to review our valuation of the drug and, hence, our numbers. "On the economic front, UK retail sales are tipped to have risen 0.2% in June, after falling by 1.4% in May. The year-on-year comparison is expected to show a fall of 0.1%."Survey evidence for retail sales in June from the Confederation of British Industry (especially) and the British Retail Consortium was weak overall. However, there were signs in the British Retail Consortium's survey that there may have been a limited boost to sales coming from some retailers starting their summer clearance sales earlier," reports Dr. Howard Archer, economist at forecasting agency IHS Global Insight.INTERIMSCapita Group, Howden Joinery Group, MicrogenINTERIM DIVIDEND PAYMENT DATEEdinburgh Worldwide Inv Trust, Euromoney Institutional InvestorINTERNATIONAL ECONOMIC ANNOUNCEMENTSPMI Manufacturing Survey (FRA) (08:00)PMI Service Sector Survey (FRA) (08:00)PMI Manufacturing Survey (GER) (08:30)PMI Service Sector Survey (GER) (08:30)PMI Manufacturing Survey (EC) (09:00)PMI Service Sector Survey (EC) (09:00)PMI Composite Index (EC) (09:00)Current Account (EU) (09:00)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)GMSMedia Square, WincantonFINALSEredene CapitalIMSSGreat Portland Estates, Mitchells & ButlersAGMSAlbion Enterprise VCT, Athol Gold Ltd. (DI), Byotrol, Cable & Wireless Worldwide, Caledonia Investments, Coastal Energy Co (DI), De La Rue, Mckay Securities, Media Square, Personal Assets Trust, RAB Special Situations Company Ltd. (Reg S), SABMiller, Scottish & Southern Energy, Shanks Group, Vertu Motors, WincantonTRADING ANNOUNCEMENTSHilton Food Group, Kingfisher, SABMillerUK ECONOMIC ANNOUNCEMENTSPublic Sector Finances (09:30)Retail Sales (09:30)FINAL DIVIDEND PAYMENT DATEBritish Polythene Industries, DCC, Hamworthy, Nature Group, Tongaat-Hulett Ltd.