Tuesday preview: Lloyds, M&S, AB Foods, Prudential

7th Nov 2011 18:03

Temporary chief executive Tim Tookey will no doubt be handling conference call duties on Tuesday after the release of third quarter figures from part-nationalised lender Lloyds Banking. Tookey, the group's chief financial officer, is standing in for António Horta-Osório, while the Portuguese boss recovers from exhaustion.Credit Suisse thinks the bank will report total income, net of insurance claims, of £4,710m, down 9.6% from the previous quarter, with costs of £2,513m, down 2.7% from the second quarter (Q2). Credit Suisse is projecting a cost:income ratio of 53.3%. "Provisions are likely to remain elevated, although improving somewhat from Q2 at £2,390mn. Overall we expect a net attributable loss of £90mn for the period," Credit Suisse said.Nomura Securities, meanwhile, says it is more bearish than the consensus on impairments for the full-year; it predicts full-year impairments of £10.8bn, versus the market consensus of £10bn, while for the third quarter alone it has pencilled in a figure of £2.7bn.The broker thinks revenue and margin outlook will be key features to look out for. Management has indicated it expects 2011 margin of 205 basis points (i.e. 2.05 percentage points), "but given the worsening outlook we assume margins of 195bps [basis points] for Q3 and 199bps for 2012."The Japanese broker is a bit more pessimistic than its Swiss counterpart on costs, as well, predicting Lloyds' third quarter costs will be around £2.7bn, similar to the run-rate in the first half of the year. "We see pressure on core operations from the worsening revenue outlook. We assume non-core losses to be similar to the H1 [first half] run rate at £ 1.8bn," Nomura concluded.Tuesday also sees retail bellwether Marks & Spencer (M&S) reporting, and broker Charles Stanley is expecting a "soft" set of results. The broker reckons half-year sales will be £4,650m, up from £4,570m at the interim stage last year. Profit before tax, however, is tipped to dip to £315m from £349m last year, while earnings per share could slide to 15.1p from 16.6p. The interim dividend is seen remaining at 6.2p."We expect sales momentum to have slowed in Q2 [second quarter] as comparatives became tougher and pressure on consumers' disposable incomes increased. For H1 [first half] as a whole we forecast like-for-like sales to be broadly flat, with General Merchandise down by 1% and Food up by 2%," predicts Charles Stanley analyst, Sam Hart."Chief Executive, Marc Bolland, is expected to provide an update on the three year strategic plan first outlined with interim results last year. Key areas of focus include improving the in-store environment; strengthening both the core-M&S and sub-brands in clothing; more fully exploiting the opportunity in homewares; developing the on-line offer; expanding International; and completing modernisation of the supply chain and IT systems," Hart speculated.Primark-owner Associated British Foods is another Footsie giant reporting on Tuesday. Market expectations are for profit before tax of £802.2m, down from £820m the year before, on turnover of £10,956m (£10,098m). Charles Stanley says "The pre-close statement has largely guided the market for these results and the primary questions will centre round the outlook comments. Overall group margin compression remains the risk to forecasts and hence potential downside pressure on forecasts."Meanwhile, Credit Suisse notes "the warm climate has probably meant a slow start to the current year at Primark, as indeed it has the high street in general."The broker continues: "Sugar will inevitably be a focus of attention, with the industry having contracted for the new year at over Eu600/tonne (up Eu100/tonne versus last year). This should feed through to a significant increase in profits for that division in 2012."Nomura seems to agree, saying the favourable outlook for sugar pricing over the next few years could prompt upgrades.Insurer Prudential releases an interim management statement covering the first nine months of 2011. Panmure Gordon forecasts nine-month sales of £2,635m on an annualised premium equivalent basis, and new business profit of £1,467m. "Although it will have been a challenging quarter given investment markets we believe Pru's sales will have been relatively resilient," the broker reckons.On the economic front, the British Retail Consortium will release its retail sales monitor for October shortly after midnight. Dr. Howard Archer of IHS Global Insight reckons the figures will have "weakened anew after seeing limited improvement in September when sales were helped modestly by the warm weather at the end of the month." Dr. Archer reckons softening retail sales in October will have been primarily the consequence of the ongoing serious squeeze on consumers' purchasing power and very low and falling confidence. "Indeed, the serious squeeze on consumers' purchasing power has if anything increased recently, with latest data showing that consumer price inflation climbed to 5.2% in September while underlying average earnings growth was limited to 1.6% in August." INTERIMSBabcock International Group, Carphone Warehouse Group, DCC, Eckoh, Kewill, Marks & Spencer Group, Reliance Infrastructure Ltd. GDR (Reg S), Umeco, Vodafone Group, Yell GroupINTERIM DIVIDEND PAYMENT DATEAshley (Laura) HoldingQUARTERLY EX-DIVIDEND DATEIBM Corp.INTERNATIONAL ECONOMIC ANNOUNCEMENTSCurrent Account (JPN)Trade Balance (JPN)Balance of Trade (GER) (07:00)Current Account (GER) (07:00)Balance of Trade (FRA) (07:00)NFIB Small Business Optimism (US) (12:30)Q2Reliance Infrastructure Ltd. GDR (Reg S)Q3Coca-Cola HBC S.A., First Quantum Minerals Ltd., InterContinental Hotels Group, Komercni Banka GDR (Level 1)GMSCharter European Trust, Trans-Siberian GoldFINALSAssociated British FoodsIMSSBovis Homes Group, Bwin.party Digital Entertainment, Capital & Counties Properties , G4S, Hammerson, Hardy Oil & Gas, Lloyds Banking Group, Prudential, Resolution Ltd., SEGROAGMSA&J Mucklow Group, Asian Citrus Holding, Energy XXI (Bermuda) (Di), Strategic Equity CapitalUK ECONOMIC ANNOUNCEMENTSBRC Sales Monitor (00:01)RICS House Price Balance (00:01)Industrial Production (09:30)Manufacturing Production (09:30)