Wednesday preview: Sainsbury, SSE, Aveva, BoE inflation report

9th Nov 2010 16:19

It's just over a month since supermarket firm J. Sainsbury updated the market, so Wednesday's interim numbers should not contain too many surprises.The company said last month that total sales for the 16 weeks to 2 October jumped 6.6% (5.2% without fuel) and were up 7% for the six months (4.8% ex fuel) from a year earlier."New space has continued to perform ahead of our expectations delivering a further 2.3% contribution to sales growth (excluding fuel)," chief executive Justin King said. The firm opened seven supermarkets, 12 convenience stores and completed 7 extensions during the period.King did warn, however, that he expected the consumer environment to remain challenging. The obdurate refusal of inflation to decline may be vexing the Bank of England's monetary policy committee but it continues to provide a pleasant tailwind to supermarket sales; food inflation reached a 16-month high of 4.4% in October.Market research group Kantar Worldpanel thinks the UK supermarkets are growing grocery sales at slightly above the food price inflation rate, with Sainsbury leaving its rivals trailing in October with a 6.1% year on year improvement in grocery sales, as against 4.0% for the sector as a whole."Sainsbury's has hit a sweet spot" with the balance between price and quality, according to Kantar Worldpanel's communications director, Edward Garner.Analysts have pencilled in a figure of £330m for adjusted pre-tax profits, with some suggesting that the group needs to work on converting its sales growth into bigger profits.Japanese securities house Nomura Securities gave utility company Scottish and Southern Energy (SSE) a bit of a going over earlier this week, downgrading it to "reduce" from "hold" and even suggesting the dividend, the main appeal of holding the shares, could be under threat.The broker has cut its SSE earnings forecast for 2012 and 2013 by 7% and 11% respectively because of a weaker power price environment.More immediately, the market believes current year profits will be under pressure. JPMorgan Cazenove thinks operating profits at the interim stage from the generation and supply business will decline for the first time since 2003.It predicts interim pre-tax profits of £368m, down from £410.5m the year before. Citigroup, meanwhile, forecasts a 5.7% fall in operating profits. Engineering software firm Aveva releases interim results less than a month after a trading update, so the focus will be on developments since the end of the reporting period.Panmure Gordon feels it is still too early in the financial year for Aveva to signal an earnings upgrade but reckons the market is factoring one into the share price anyway.The broker is forecasting revenue to rise to £77m from £69.9m at the halfway stage last year. Earnings before interest, tax, depreciation and amortisation are expected to be £25.3m, and adjusted profit before tax is forecast to be £23.9m. An interim dividend of 6.3p is expected. "Aveva is likely to say that the Oil and Gas markets have remained 'positive', underpinned particularly in developing countries such as Brazil. The Power market is 'stable' and the Marine market continues to be 'slow'," the broker predicts, which would make the statement similar to last month's pre-close period statement. "The investment plans for AVEVA NET are being progressed, focusing on the £500m owner operator market - we have in the past stated that EPCs [Engineer - Procure - Construct] have been looking for extra functionality, and this might explain the focus on the owner operators," the broker said. At 9:30 the Bank of England will release its quarterly inflation report for November. The expectations are that the Bank will raise both its short-term growth forecasts for gross domestic product and inflation.INTERIMS3i Group, Aveva Group, Great Portland Estates, IS Pharma, Sainsbury (J), Scottish & Southern Energy, Western Coal Corp.INTERIM DIVIDEND PAYMENT DATEAshley (Laura) Holding, CarillionINTERIM EX-DIVIDEND DATEAir Partner, Amati VCT , Anglo Pacific Group, Bunzl, Cable & Wireless Communications, First Derivatives, Home Retail Group, Invensys, JZ Capital Partners Ltd., Maven Income & Growth VCT, Pace, Stobart Group Ltd., Synergy HealthQUARTERLY EX-DIVIDEND DATEF&C Commercial Property Trust Ltd., UnileverINTERNATIONAL ECONOMIC ANNOUNCEMENTSConsumer Confidence (JPN)Machine Orders (JPN)CGPI (JPN)Consumer Price Index (FRA) (06:30)Industrial Production (FRA) (07:45)Manufacturing Output (FRA) (07:45)MBA Mortgage Applications (US) (12:00)Balance of Trade (US) (13:30)Weekly Jobless Claims (US) (13:30)Crude Oil Inventories (US) (15:30)Existing Home Sales (US) (15:00)Treasury Budget Statement (US) (19:00)Q3Bank Pekao SA GDS (Reg S), Eurasia Drilling Co Ltd. GDR (Reg S), Smurfit Kappa Group, Talvivaara Mining CompanyGMSCMA Global Hedge PCC Ltd. EUR Shares, RedHot Media International Ltd (DI)., Serviced Office GroupFINALSFennerANNUAL REPORTScottish & Southern EnergyIMSSArk Therapeutics Group, Johnston Press, Prudential, Supergroup, Tullow OilSPECIAL EX-DIVIDEND PAYMENT DATEJZ Capital Partners Ltd., Yamana Gold Inc.EGMSCMA Global Hedge PCC Ltd. EUR SharesAGMSAllied Gold Ltd., Hays, Oilex Ltd., System C Healthcare, Westmount Energy Ltd., Wilmington GroupTRADING ANNOUNCEMENTSMicro Focus International Plc, SupergroupUK ECONOMIC ANNOUNCEMENTSBoE Inflation Report (09:30)FINAL EX-DIVIDEND DATEAnimalcare Group, Centaur Media, Craneware, Dechra Pharmaceuticals, Downing Absolute Income VCT 1, Edinburgh Dragon Trust, Gartmore Fledgling Trust, JPMorgan Smaller Companies Inv Trust, Manchester & London Inv Trust, Swallowfield, World Careers Network