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Scotland on Sunday: Corporate giants to unveil profits tally near £30bn

IAIN DEY
CITY EDITOR
SOME of Britain's biggest corporate names will unveil a combined profits tally of close to £30bn this week, as the FTSE results season kicks off in earnest – potentially giving a further boost to the markets.
Oil giant BP, pharmaceuticals mammoth GlaxoSmithKline, consumer goods group Unilever, chemicals giant ICI and engineering heavyweight Rolls-Royce are all expected to reveal sharp jumps in profits.
ScottishPower, Medical devices firm Smith & Nephew, and oil exploration firm BG Group are also expected to chart big profits.
The figures come hot on the heels of the record British profit of £13bn recorded by Royal Dutch Shell last week, and ahead of more bumper profits from the high street banks.
Some analysts believe the soaring profits will give a further boost to the FTSE, which has raced ahead so far in 2006, and shrugged off concerns from Wall Street on Friday to close 12 points higher at 5,759.3.
HSBC's UK equity strategist, Robert Parkes, said: “Corporate earnings are still going to be very supportive for the market. We think profits across the board will come in at least level with expectations. Generally speaking, earnings are strong and valuations still relatively low.”
He added: “The global economy is very strong, and that's more important to our bigger companies than what happens at home. Sterling has also been good for UK earnings this year, after being weaker against the dollar.”
BP is expected to report record profits of £12.2bn – boosted by the record crude prices over the course of the year.
Although the figures would be 30% higher than its previous record of £9.1bn, achieved in 2004, it will still fall short of rival Shell's bumper profits tally.
In a trading statement last month, BP warned investors that the devastating season of hurricanes in the US had cost it more than £570m in 2005.
Production was cut at its rigs in the Gulf of Mexico and at onshore refineries such as Texas City, which was also the scene of a fatal fire in March.
GlaxoSmithKline's pre-tax profits are expected to have risen to more than £6.6bn, from £5.8bn last year. Turnover is expected to be around 7% higher.
Despite the huge profits, the City will be pressing the firm for details on its asthma drug, Advair – its second-biggest product.
More than £4bn was wiped off the value of Glaxo in one day in November after authorities in the United States proposed changes to the way the drug was labelled.
Unilever, whose products range from Dove soap to Hellmann's mayonnaise, is expected to show the fruits of its long-running turnaround, with profits jumping roughly 35% to £3.4bn.
Further details are also expected to emerge of a corporate review related to its Anglo-Dutch board structure.
Rolls-Royce – one of the market's best performing stocks in 2005 – is predicted to reveal that profits have leapt almost six-fold, climbing from £110m to £640m.
Although the company is believed to have lost out on a contract to provide engines for the new F35 Joint Strike Fighter aircraft, it is thought to have landed another major deal with Pratt & Whitney.

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