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Week Ahead: Margins in focus at Marks & Spencer

Published: 01:30 18 May 2014 EDT

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It is a busy week in store, starting with Monday, when engineering services company Babcock International reports full-year results.

Market expectations are for pre-tax profit of £312mln on revenue of £3.47bn. Broker Credit Suisse will also be looking for further clarification around the restructuring of the balance sheet pf recent acquisition Avincis.

The broker recently initiated coverage with an ‘outperform’ rating and a discounted cash flow-derived price target of 1,350p.

"The core business is in good shape with exportable, market-leading positions in the UK, backed by a strong and growing bid pipeline,” the broker asserted, while the acquisition of Avincis makes strategic and financial sense, in Credit Suisse’s view, as it diversifies the group.

On Tuesday, retail bellwether Marks & Spencer checks in, some five weeks after it reported on trading in the current financial year.

This time round it will be publishing the numbers for the financial year just ended, with the market expecting profit before tax of £615mln on sales of £10.3bn. Attention is likely to focus on margins and financial guidance for the current fiscal year.

On the same day, slimmed-down telecoms behemoth Vodafone releases its figures for the year to the end of March.
Broker forecasts point to a profit figure of £7.3bn on turnover of £43.7bn.

Attention will focus on trends and expectations for Europe, any news on the early stages of the Project Spring extra investment plan, and guidance for the current year, according to Charles Stanley.

UK Mail, Daily Mail and Royal Mail all report this week, with the latter’s update set to attract the most newsprint – even from the Daily Mail.

JP Morgan Cazenove reckons the focus will be guidance, an elaboration on restructuring plans plus underlying growth of the parcels business.

“Chief near-term catalysts: an assumed convergence of ‘print’ parcels growth with underlying guidance in the mid-single digits, clarity on restructuring efforts and the potential impacts of end-to-end competition and the role of regulator Ofcom in maintaining the viability of the USO [universal service obligation],” Cazenove ventured.

Significant announcements expected

Monday

Companies: Finals: Babcock International Group (LON:BAB), Cranswick (LON:CWK), e2v technologies (LON:E2V). Gable Holdings (LON:GAH), MITIE Group (LON:MTO), Ryanair Holdings (LON:RYA), Tangent Communications (LON:TNG), Tissue Regenix (LON:TRX). Interims: ITE Group (LON:ITE), Shaftesbury (LON:SHB), Innovation Group (The) (LON:TIG), Topps Tiles (LON:TPT). Trading Statement: Alent (LON:ALNT), Chesnara (LON:CSN), Charles Taylor Consulting (LON:CTR), DRS Data & Research Services (LON:DRS), Irish Continental Group (LON:ICGC).

Economic: UK: Rightmove HPI. EU: German Buba Monthly Report.

Tuesday

Companies: Finals: Blur Group (LON:BLUR). Bloomsbury Publishing (LON:BMY), BTG (LON:BTG), Big Yellow Group (LON:BYG), Entertainment One Group (LON:ETO), First Derivatives (LON:FDP), Homeserve (LON:HSV), Intermediate Capital Group (LON:ICP), Marks & Spencer Group (LON:MKS), Vodafone Group (LON:VOD). Interims: Driver Group (LON:DRV), Greencore Group (LON:GNC), Paragon Group of Companies (The) (LON:PAG), Renew Holdings (LON:RNWH), Topps Tiles (LON:TPT), Victrex (LON:VCT). Trading Statement: Afren (LON:AFR), APR Energy (LON:APR), Spirax-Sarco Engineering (LON:SPX).

Economic: UK: PPI Input, CPI, RPI, Core CPI, HPI, PPI Output. EU: German PPI.

Wednesday

Companies: Finals: Burberry Group (LON:BRBY), Cable & Wireless Communications (LON:CWC), DCC (LON:DCC), FirstGroup (LON:FGP), Great Portland Estates (LON:GPOR), Pennon Group (LON:PNN), SSE (LON:SSE), Stobart Group (LON:STOB), Telecom plus (LON:TEP), UK Mail Group (LON:UKM), Vectura Group (LON:VEC). Interims: Britvic (LON:BVIC), Frutarom Industries (LON:FRUT).

The following widely held stocks are trading in ex-dividend form on Wednesday: Intertek, Carnival, HSBC, Home Retail

Economic: UK: MPC Asset Purchase Facility Votes, MPC Official Bank Rate Votes, Retail Sales. EU: Current Account, Consumer Confidence. US: FOMC Meeting Minutes.

Thursday

Companies: Finals: Booker Group (LON:BOK), Dairy Crest Group (LON:DCG), Electrocomponents (LON:ECM), Halfords Group (LON:HFD), Hogg Robinson Group (LON:HRG), Hydrodec Group (LON:HYR), Investec (LON:INVR), Max Property Group (LON:MAX), Mothercare (LON:MTC), QinetiQ Group (LON:QQ.), Royal Mail (LON:RMG), SABMiller (LON:SAB), United Utilities Group (LON:UU.). Interims: Daily Mail and General Trust (LON:DMGT), Mitchells & Butlers (LON:MAB). Trading Statement: Amlin (LON:AML).

Economic: UK: Second Estimate GDP, Prelim Business Investment, Public Sector Net Borrowing, Index of Services, CBI Industrial Order Expectations. EU: French Flash Services PMI, French Flash Manufacturing PMI, German Flash Manufacturing PMI, German Flash Services PMI, Flash Manufacturing PMI, Flash Services PMI. US: Unemployment Claims, Flash Manufacturing PMI, Existing Home Sales, CB Leading Index.

Friday

Companies: Finals: Quintain Estates & Development (LON:QED). Trading Statement: Close Brothers Group (LON:CBG).

Economic: EU: German Final GDP, German Ifo Business Climate, Italian Retail Sales, Belgian NBB Business Climate. US: New Home Sales.

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