The low-cost carrier easyJet expets its profits to be flying high, as it benefits from bookings for late summer sun breaks.
Britons flocking to beach destinations for some late summer sun after the Olympics encouraged easyJet in September to update its full-year profit guidance from £280m-£300m to £310m-£320m.
easyJet and rival Ryanair have long been tipped as potential winners in the turbulent European aviation market, which is forcing IAG, owner of British Airways and Iberia (Madrid: IBLA.MC - news) , to slash costs and jobs amid sky-high fuel prices and recession in key markets. easyJet has also had to absorb an extra £230m in fuel costs this year but price increases and growth in ancillary revenues such as snacks are expected to see pre-tax profits come in at the top end of the guided range. However, after several battles with its founder Sir Stelios Haji-Ioannou, easyJet could become a target. Mark Manduca, analyst at Bank of America Merrill Lynch, believes there is a “significant medium-term M&A risk”.
“We cite the case of Stelmar Shipping as an indication of founder Sir Stelios’ intentions,” Mr Manduca said. Sir Stelios backed a takeover of the shipping group he founded.
= Week ahead =
The Chancellor will be keeping a close eye on October’s public finances when the Office for National Statistics releases the figures on Wednesday. October is an important month for corporation tax receipts and it will be the final illustration of how borrowing will fare this year before the key Autumn Statement. Last month’s data suggested he was closer to hitting his targets this year than was thought .
The public finances come on the same day as the minutes of the Bank’s rate-setting meeting this month, which will carry intriguing news about the effect of the Treasury’s £37bn coupon transfer on the decision to hold quantitative easing and just how split the committee was.
In Europe, the leaders’ showdown over budget negotiations promises to be lively with the UK pushing hard to block any increase. And eurozone finance ministers gather on Tuesday to decide whether to release the latest tranche of aid to Greece.
= Monday November 19 =
Economics FSA’s Lord Turner and Andrew Bailey before Parliamentary Commission on Banking Standards
Meetings Lonmin (EGM)
= Tuesday November 19 =
• Commercial property group British Land (LSE: BLND.L - news) is expected to post an interim net asset value of 593p, slightly below the 595p recorded at the interim stage last year. Pre-tax profits are, however, expected to tick marginally higher, up to £134.7m from £132m.
• Insurer Homeserve, which is being investigated for alleged mis-selling by the Financial Services Authority, reports first-half results. UBS (NYSEArca: DJCI - news) analysts forecast a £10m drop in half year revenue to £203m and profits of £24.3m, up just 0.3pc on last year.
Better news is expected from the French division which should see a profit increase after becoming sole owner of competitor Domeo, but Homeserve’s extensive restructuring activities in the UK will flatten profits from this division.
Interim results Big Yellow Group (Berlin: B9Y.BE - news) , British Land, Carclo (Xetra: 872295 - news) , CML Microsystems, Eckoh (LSE: ECK.L - news) , Halma (Berlin: H11.BE - news) , Homeserve (LSE: HSV.L - news) , McKay Securities (Berlin: M8K.BE - news) , Schroder Real Estate Investment Trust, Telecom Plus (Berlin: T8T.BE - news) , Vectura
Trading update None scheduled
= Wednesday November 21 =
• The City will get the chance this week to hear from the new chief executive of Halfords for the first time when the car parts and bicycle retailer posts interim results. Matt Davies, the former boss of Pets at Home, is likely to focus on improving Halfords’ customer service and its multi-channel offer. In terms of financial performance, like-for-like sales rose 5.6pc in the most recent quarter as the retailer enjoyed a welcome post-Olympics boost. Philip Dorgan, analyst at Panmure Gordon, said: “We believe that, with a proper focus on service, Halfords can unlock the potential within its fragmented markets.”
Interim results Halfords Group (LSE: HFD.L - news) , Hyder Consulting (LSE: HYC.L - news) , Imaginatik (Berlin: IE6.BE - news) , Johnson Matthey, Omega Diagnostics Group, Qinetiq Group (Other OTC: QNTQF.PK - news) , UK Mail Group (LSE: UKM.L - news)
Trading update French Connection Group, Intermediate Capital Group
Economics Minutes of November Monetary Policy Committee meeting, UK public finances, George Osborne before Parliamentary Commission on Banking Standards
Meetings International Ferro Metals (AGM)
= Thursday November 22 =
• The progress of Simon Calver’s drive to turn around Mothercare (LSE: MTC.L - news) will be revealed when the baby clothing and equipment retailer posts interim results. In October, Mr Calver said his plans were “on track” after a 0.3pc rise in UK like-for-like sales over the previous quarter. The company’s share price has enjoyed a good run this year , but Mothercare is still in the eye of the high street storm. Analysts at Panmure Gordon are forecasting that Mothercare will post a loss before tax of £4.6m for the first half . They add: “We are not convinced this potential recovery is based on sustainable gross margins, and we are also now faced with a disappointing result in the international division .”
• Margins are likely to be the main focus of attention when SABMiller (Dusseldorf: 981602.DU - news) , the brewing giant whose brands include Grolsch and Peroni, reports interim results. Santander (Madrid: SAN.MC - news) analyst Anthony Bucalo said there is growing concern about higher input costs in Europe (Chicago Options: ^REURUSD - news) and “price rebasing” in important markets such as Poland and Romania.
Consensus forecasts are for earnings before interest, tax and amortisation of $3.2bn (£2bn) .
Trading update Close Brothers Group
Economics CBI Industrial Trends, EU Budget meeting, Sir Mervyn King before Parliamentary Commission on Banking Standards
= Friday November 23 =
Full-year results Future
Interim results Alpha Real Trust, Fuller Smith Turner, Picton Property Income, Sweett Group
Trading update None scheduled
Economics British Bankers’ Association mortgage approvals