Financial TImes: BP looks to keep up with its smaller rival

By Maija Palmer
Published: February 6 2006 02:00 | Last updated: February 6 2006 02:00
MONDAY
*Autonomy will report its first figures since the £282m acquisition of much bigger US rival Verity. The turmoil of such a large acquisition will make numbers relatively meaningless and the focus will be getting a flavour of what the search software company plans to do with the 16,000 new customers it has acquired through Verity. The company trades on an extremely aggressive forward multiple of about 50 times and investors need reassurance their growth expectations are justified.
TUESDAY
*Amvescap, the London-listed fund manager, which is due to report its full-year results, will be under pressure to announce plans to stem flows of investors' money from its assets under management. The Anglo-US business, embroiled two years ago in a US scandal over mutual funds and which has been suffering fund outflows for about five years, is expected to reveal a new business strategy under its new management team. In his first set of annual results as chief executive, Marty Flanagan, who was appointed last year from Franklin Templeton fund managers, is likely to face questions about how he plans to invigorate the retail division of the business and increase investment performance. Consensus forecasts are for pre-tax profitof $251.2m (£141.1m) on revenues up from $1.16bn in 2004 to $1.19bn for 2005.
*Royal Dutch Shell's record highest corporate profit in the UK, set on Thursday, could prove short-lived. The deciding factor will be whether BP can beat Shell's $22.9bn profit of 2005 when it reveals its figures. Shell's bigger rival will not only have benefited from higher oil prices that hit a record $72.85 a barrel after Hurricane Katrina this summer but also from its exposure to US refining, which enjoyed stellar margins in 2005. The company is expected to have earnt $5.6bn (£3.2bn) to $5.8bn in the fourth quarter, up from $4.8bn in the last quarter of 2004 and from $5.3bn in the third quarter of 2005. The figures could have been better had BP last month not warned that it would have to take aone-off $1.3bn charge, largely because of new UK gas contract accounting rules. But big profit does not woo investors, especially if the gains have more to do with the impact of storms and geopolitics on oil prices than with the prowess of the company. Key for analysts will be how well BP did in increasing production and replacing the reserves it used up in 2005. Rising oil prices and increasingly aggressive governments of petrostates wanting a larger slice of the pie could have impacted BP's reserves last year, analysts said.
WEDNESDAY
*Those expecting further updates from BOC about Linde at the first-quarter results presentation are likely to be disappointed. Instead, the group will point to good trading in the core gases division driven by strong performance in the Americas and Asia that will offset weakness in the UK. But first-quarter earnings per share growth could be down due to the disposal of the Afrox Healthcare business last year. More positively, BOC Edwards, the semiconductor equipment supplier, should show some improvement. First-quarter sales are expected tobe about £950m, with virtually flat pre-tax profit of £127m.
*Reckitt Benckiser's full-year figures are unlikely to cause surprises, given the company's skill at keeping the market updated. In October, it said it was on track to increase net income by a percentage in the mid-teens in 2005, from a base of £563m, suggesting a figure close to £650m. Net income rose 16 per cent in the first nine months of the year. Interest is likely to centre on plans to extract benefits from the £1.93bn purchase of Boots' healthcare business, a deal that completed last Wednesday. Investors will also be looking for reassurance that higher input costs are not putting pressure on margins.
THURSDAY
*ICI should demonstrate that it has successfully passed on higher raw material costs to customers when it reports full-year results. The health of the petro-chemical sector and restructuring in paints should impact on underlying profit. But it will face further raw material price pressure this year, which could hit margins depending on customers' willingness to take further price rises. Also, observers will be expecting an update on the group's pension deficit and possible funding arrangements. Underlying profit should come in at about £440m, with earnings per share at about 26.5p.
THURSDAY
*When Unilever reports full-year results, it is likely to show an improvement in organic sales growth relative to the previous year. But analysts say growth has been spurred by price cuts. Analysts are still looking for Unilever to prove that it can compete not just with its branded competitors but also with retailers' own-label brands – which have stolen market share from branded companies by selling products at cheaper prices. Goldman forecasts full-year pre-tax profit of £3.25bn compared with £2.49bn in 2004 but only a marginal increase in sales to £26.8bn.

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