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Scotland On Sunday / The Scotsman: Taverns figures expected to pack profits Punch

GUY DIXON
 
THE FTSE 100 briefly breached the 6,500 barrier last Thursday, taking its lead from Wall Street where the Dow Jones Industrial Average broke through the 13,000 mark.

But news that the US economy grew more slowly than expected in the first three months then expected weighed heavily on the FTSE and helped it close on Friday at 6,418.7 – a fall of 68.1 points over the week.

Yell, the Yellow Pages publisher, suffered a disastrous week after a warning over intense competition in the US wiped more than £800m off the value of the business. Shares finished the week more than 20% down at 480p.

It was also a mixed week for pharmaceutical firms as investors gave the thumbs-down to AstraZeneca’s £7.6bn acquisition of US vaccines firm MedImmune, suspecting it had overpaid.

Rival GlaxoSmithKline was hit by the weaker dollar in first-quarter results despite profits exceeding forecasts and ended the week down 3% at 1,440p.

Anglo-Dutch oil giant Royal Dutch Shell is expected to show the impact of falling energy prices when it publishes first-quarter results on Thursday.

Profits in the first three months of the year of £2.78bn are forecast, nearly 5% lower than last year’s £3.31bn, despite a predicted 7% increase in sales.

Investors will also be watching for updates on production levels, which were hit last year by attacks on pipelines in Nigeria, as the firm looks to find new sources of oil and gas.

Earlier this month Shell said it would pay £180m to shareholders in an attempt to draw a line under the crisis over the downgrading of its oil reserves three years ago.

Punch Taverns, the UK’s biggest pubs group, is expected to deliver a strong set of interim figures on Tuesday.

The group, headed by Giles Thorley, is forecast to benefit from impressive food sales, driving up like-for-like performance, and analysts are forecasting profits before tax of £128.1m, up 10.5% on the previous year’s interims.

Goldman Sachs said the average profit in the tenanted and leased estate should show improvements due to the recent disposal of 869 pubs to rival Admiral Taverns for £326m.

Punch said the money would be used to reduce its debt.

Performance at Punch’s Scottish operations will also be watched closely next week following the introduction of the smoking ban last March. Sales in the division sank 1.5% in the first half of last year and any sign of further deterioration could be seen as an indication of how the UK arm will fare after the ban comes into force across England and Wales.

Argos and Homebase parent Home Retail Group will announce its first full year results since splitting from Experian on Wednesday. The retailer said last month that full-year profits were likely to be “slightly above” expectations after a stronger performance at catalogue business Argos in the last eight weeks of the period, up to 3 March. But the group added it remained cautious about prospects as it expected the retail environment to be challenging.

Analysts expect profits before tax to rise 11% to £373m.

DIY chain Homebase is expected to add gloss to the full year figures, with like-for-like sales having risen 9.9% in the eight week period to the end of the financial year.

Online gaming group 888 Holdings announced earlier this month that talks regarding a possible “transaction” with bookmakers Ladbrokes had been terminated. With its full-year results due tomorrow, the City will be looking to see if the company provides any update on a possible tie-up or disposal of the company.

Analysts at Numis are forecasting pre-tax profits of £38.2m for the year to December 31.

This article: http://scotlandonsunday.scotsman.com/business.cfm?id=659242007

Last updated: 29-Apr-07 01:00 BST

Comments

1. John Donovan, Colchester, UK / 8:39am 29 Apr 2007

Your article mentions Shell’s desire to draw a line under the reserves scandal which has destroyed its reputation.

The June 2005 Royal Dutch “unification” AGM”, arising from the reserves scandal, commenced and ended with a classic Shell TV commercial being shown on giant screens. It featured the legendary crooner Bing Crosby singing the virtues of Shell ending with the memorable concluding lyric: “You can be sure of Shell!” How could anyone have forecast that The Wall Street Journal would end up publishing a headline, as it did the other day, saying “Shell settles U.S. fraud case”. Bing must be turning in his grave. I suspect the malady will linger on for many years to come.

Posted by John Donovan, co-owner of the website www.royaldutchshellplc.com

 

royaldutchshellplc.com and its sister websites royaldutchshellgroup.com, shellenergy.website, shellnazihistory.com, royaldutchshell.website, johndonovan.website, shellnews.net and shell2004.com are all owned by John Donovan. There is also a Wikipedia article.

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