Thursday preview: Shell, Unilever, GSK, Vodafone, MPC

3rd Feb 2010 14:42

Shareholders in Royal Dutch Shell are probably apprehensive ahead of the Anglo-Dutch oil titan's fourth quarter results on Thursday after the drubbing the share price of perennial rival BP took following the UK company's disappointing figures.Royal Dutch Shell is expected to announce fourth quarter net income of $2.9bn, down from $3.9bn in the final quarter of 2008. The dividend is expected to be maintained at 42 cents.As with BP, the main drag on performance is likely to be the downstream activities, but Deutsche Bank thinks the upstream business will see a 'useful pick up'. Charles Stanley agrees. 'The Q3 [third quarter] Upstream earnings of $1.7bn was very disappointing but with improved pricing and lower costs, we look for an Upstream outcome of $2.8bn in Q4 [fourth quarter].'The broker thinks the fourth quarter contribution from downstream activities (refining, marketing and chemicals) will ease to $0.5bn from $0.75bn in the third quarter.Sticking with the Anglo-Dutch theme, household goods giant Unilever issues full year figures at noon on Thursday that should see year on year like for like sales growth of 3.4%, which Charles Stanley calculates implies organic growth of 'just 1.0%' in the fourth quarter.'Underlying operating margins are forecast to have risen by 20bps [basis points] over 2009, to 14.8% (itself a 100bps improvement over Q4),' the broker adds. Charles Stanley has pencilled in a figure of £35.84bn for full year sales, down from £39.47bn in 2008. Earnings per share are tipped to slide to 115.5p from 139.0p.Market consensus is for Anglo-American drugs leviathan GlaxoSmithkline (GSK) to declare full year earnings per share (EPS) of 118.6p, up from 104.70p in 2008. Pre-tax profit is forecast to rise to £8.41bn from £6.66bn on revenue that grew from £24.35bn to £28.11bn.As for prospects for 2010, JP Morgan said 'it is hard to see how GSK can avoid another trough year in 2010. Even factoring in £1bn H1N1 [swine flu] sales for 2010 (subject to confirmation by the company on Feb 4, 2010) we only project 2% group sales growth in 2010, but margin compression should result in a low single digit EPS decline.'Nomura thinks fourth quarter earnings per share will be 32.0p, versus consensus of 33.5p and the third quarter 2008 figure of 26.7p. Mobile phone network firm Vodafone is also issuing quarterly figures covering the last three months of 2009, the third quarter of the company's financial year. Societe Generale is not expecting to be impressed by the figures and has recently lowered its earnings before interest, tax, depreciation and amortisation (EBITDA) forecast by 5% to reflect deteriorating trends. The French bank thinks 'accelerating pressure on voice pricing is kicking in, driven by competition and regulatory factors,' though the recovery economy should spark growth in mobile services by users.Deutsche Bank is much more bullish. 'Whilst we saw some green shoots of recovery in Q2 [second quarter] (e.g. Spain) these should be more widespread in Q3 [third quarter]. We anticipate that European organic service revenue growth will improve by 50bp [basis points], the first improvement for some time. Any sign of higher growth from mobile data would be further supportive. Group organic growth should improve by 0.4pp [percentage points] to -2.6% and see total revenues breach £11.4bn,' the German bank said.Deutsche's revenue call is in line with market consensus for third quarter revenue, which should rise by 9% to £11.41bn from £10.47bn a year earlier. It's a big day for the Monetary Policy Committee, the Bank of England team that sets interest rate and quantitative easing (QE) policy.The current QE programme of a £200bn injection comes to an end this month, posing the question: should the committee turn the tap on again?The expected answer to this question was almost certainly a resounding 'no' prior to the release of the fourth quarter gross domestic product (GDP) data which saw the UK economy finally limp out of the recession, but the disappointing GDP figures makes the decision a lot less clear cut.The smart money is still on the committee adopting a wait-and-see posture and calling a moratorium on QE. Interest rates, meanwhile, are almost certain to remain at their historic low of 0.5%.INTERIMSAlumasc GroupINTERIM DIVIDEND PAYMENT DATEBurberry Group, Mitie Group, Robert WisemanINTERNATIONAL ECONOMIC ANNOUNCEMENTSBusiness Inventories (US) (15:00)ECB Interest Rate (EU) (12:45)Factory Orders (GER) (11:00)Factory Orders (US) (15:00)Retail Sales (AUS) (00:00)Non-farm Productivity (US) (13:30)Unit Labour Costs (US) (13:30)Weekly Jobless Claims (US) (13:30)Q4Royal Dutch Shell 'A', Royal Dutch Shell 'B'GMSDiscovery Metals (CDI), VisonicFINALSCoca-Cola Hellenic Bottling Company SA, Royal Dutch Shell 'A', Royal Dutch Shell 'B', UnileverAGMSAsset Man Inv Trust, Dunedin Smaller Companies Inv Trust, Edinburgh Worldwide Inv Trust, Intec Telecom Systems, Romag HoldingsTRADING ANNOUNCEMENTSeasyJet, Fuller Smith and Turner, Vodafone GroupUK ECONOMIC ANNOUNCEMENTSBoE Interest Rate Decision (12:00)FINAL DIVIDEND PAYMENT DATEBaring Emerging Europe, Euromoney Institutional Investor, WH Smith