Wednesday preview: Serco, WPP, Tullow Oil

25th Aug 2009 16:54

Outsourcing specialist Serco releases half-year results on Wednesday that are expected to show a substantial improvement in pre-tax profit on the back of some chunky contract wins.Broker Charles Stanley is forecasting a pre-tax profit of £85m, versus £67.3m in the first half of last year, and is tipping the interim dividend to be upped to 1.6p from 1.48p.'Excluding the acquisition of SI [International], double digit revenue growth and a 30 bps [basis points] increase in adjusted PBT [profit before tax] margin is forecast and this excludes a positive currency translation effect,' Charles Stanley said.Advertising leviathan WPP is expected to report a slide in pre-tax profit, reflecting a tough first half in the advertising industry. Its much smaller peer, Chime Communications, cheered the market on Tuesday with record interim profits, and suggested that the 'outlook is good although economic uncertainty hangs over the market,' so it may not all be doom and gloom for WPP.What could set the share price back is a fund raising. Broker Nomura Securities believes balance sheet issues have been holding the share price back but also believes that recent bond issues by the company have made right issue worries a non-factor.The company's balance sheet has been showing the strain since WPP's £1.6bn debt-funded purchase of Taylor Nelson Sofres, while the weakness of sterling has not helped matters either, as most of the debt is denominated in dollars or euros.Given worries over the size of the debt, shareholders might want to brace themselves for a suspension of the company's share buyback scheme or a freezing of the dividend; typically the company looks to boost the divi by 15% each year.Charles Stanley considers a dividend freeze unlikely and is predicting an interim pay-out of 5.6p, versus 5.2p a year earlier. Profit before tax is forecast to fall to £350m from £389m on revenue of £4,345m, up from £3,339m in the first half of 2008.Ireland-based oil explorer Tullow Oil has had the magic touch with oil finds in Uganda and Ghana this year but it will take a while for those discoveries to feed through to the top line. In the meantime the company is expecting first half revenue to be 23% lower year-on-year, reflecting a drop in output and lower oil prices. Revenue for the interim period is put at about £290m, down from £378m in 2008 when oil was trading near $150 a barrel. It's closer to $60 today. It expects annual production to average 58,000 barrels of oil equivalent per day (boepd) following a 16% drop in output during the first half.INTERIMSAnglo Pacifc, Antofagasta, Ark Therapeutics, Axis-Shield, Costain Group, FBD Holdings, Gem Diamonds, Glanbia, H & T Group, John Wood Group, Paddy Power, Rambler Media Group, Serco, Tullow Oil, Vislink, Vitec Group, WPP GroupINTERIM EX-DIVIDEND DATEAberdeen Growth Opportunities VCT 2, Aberdeen Growth Opportunities VCT 2 'S' Shares, Catlin Group, Dairy Farm International (Singapore), Eurasian Natural Resources, FDM Group, Fidessa, First Quantum Minerals, Fresnillo, Henderson Opportunities Trust, Hongkong Land Holdings, InterContinental Hotels Group, Jardine Matheson (Singapore), Jardine Strategic (Singapore), Lancashire Holdings, London Capital Group, Mondi, Morgan Sindall, New Europe Property Investments, Ocean Wilsons, Patsystems, Rights & Issues Inv Trust Income Shares, ROK, Spring Group, Tarsus Group, Treatt, United Business Media, Witan Inv TrustQUARTERLY EX-DIVIDEND DATEScottish American Inv CompanyAGMSAberdeen New Dawn Inv Trust, Coral Products, Invesco Property Income Trust, INVUFINAL DIVIDEND PAYMENT DATEAlbany Inv Trust, Tangent CommunicationsFINAL EX-DIVIDEND DATEAssetCo, Cambium Global Timberland Ltd., F&C Capital & Income Inv Trust, Fletcher King, Intelek, Jupiter European Opportunities Trust, Matrix Income & Growth 2 VCT 'C' Shares, NCC Group, Newmark Security PLC, Park Group, Solid State, Spice, Stagecoach GroupINTERNATIONAL ECONOMIC ANNOUNCEMENTSDurable Goods Orders (13:30) (US)New Home Sales (15:00) (US)IfO Business Climate (09:00) (GER)IfO Current Assessment (09:00) (GER)IfO Expectations (09:00) (GER)Small Business Confidence (JPN)