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Week Ahead: Wolseley's growth to be hampered by FX headwinds

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Two thoroughly British enthusiasms – housing and holidays – will be in focus this week.

On the housing front, house builder Bellway, DIY retailer Kingfisher, tiles retailer Topps Tiles, plumbers’ merchant Wolseley and equipment hire firm Speedy Hire all have more than a passing interest in the UK housing market, though in the case of the latter pair the UK is not necessarily the centre of the universe.

Broker Peel Hunt says that Wolseley has tidied up its portfolio significantly in the last few years, leaving little to do on that front, raising the question of what it does for an encore.

“US trading should have continued to be healthy with the group taking further market share. The UK and continental European activities will have been more mixed,” Peel Hunt said in a preview of Wolseley’s half-year results.

“Currency will have been a bit of a drag especially for the Canadian operations. Overall, we expect to see turnover growth of c6% with only c2% growth in Q2 due to FX. Profits should have performed better due mainly to the US and UK activities,” the broker added.

As for Bellway, Peel Hunt is not expecting any bad news, given the state of the housing market and the strong interim management statement the company released last month.

“Sales prices will have kept ahead of cost pressures but this is an area to keep an eye on over the next 12 months or so along with the price of land,” suggests Peel Hunt’s Clyde Lewis.

Kingfisher last updated the market in November, when it reported underlying sales up by 1% during its third quarter. The share price retreated by 4% on the statement, but has rebounded by 6% since, notes Charles Stanley.

“Attention … will focus on outlook comments for the current year and any update on strategy; the share price level suggests that investors expect DIY markets in Europe to remain relatively subdued over the medium term,” the broker reckons,

Deutsche Bank is predicting profit before tax of £740mln and earnings per share of 22.6p.

“We expect the focus to be on three areas. First, the use of cash: we think a full share buyback announcement is unlikely before September, but think a special dividend (c5p/share) is a reasonable alternative.

“Second, B&Q's new management: at this early stage we do not expect definitive targets, but see good margin expansion in the year ahead. Third, the 'Creating the Leader' strategy: we think 2014 will be another year where sourcing gains are invested to reinforce Kingfisher's competitive positioning.”

Holiday firms TUI travel and Thomas Cook, as usual, issue trading updates in the same week, making comparisons very easy.

UBS expects TUI travel to confirm guidance for the first half of the year (H1) in its trading update, and to maintain its target for 7-10% earnings before interest and tax (EBIT) growth for the full year.

“We expect the EBIT loss for H1 to be slightly smaller than for the same period last year, benefitting from the timing of Easter,” the Swiss bank said. As for Thomas Cook, UBS expects trading to be broadly in line with the interim management statement released on 11th February, with summer bookings developing on a par with expectations.

“We will likely hear more on the progress of the cost saving programme,” UBS suggests.

Significant announcements expected

Monday

Companies: Finals: Magnit Ojsc (LON:50XD), Centamin (LON:CEY), Frenkel Topping Group (LON:FEN), John Laing Infrastructure Fund (LON:JLIF), Kentz Corporation (LON:KENZ), Miton Group (LON:MGR), Plant Health Care (LON:PHC), SpaceandPeople (LON:SAL), Greencoat UK Wind (LON:UKW). Interims: Allergy Therapeutics (LON:AGY), Finsbury Food Group (LON:FIF).

Economic: EU: French Flash Services PMI, French Flash Manufacturing PMI, German Flash Manufacturing PMI, German Flash Services PMI, Flash Services PMI, Flash Manufacturing PMI, Belgian NBB Business Climate. US: Flash Manufacturing PMI.

Tuesday

Companies: Finals: S & U (LON:SUS), 888 Holdings (LON:888), Accesso Technology group (LON:ACSO), Augean (LON:AUG), Corero Network Security (LON:CNS), Faroe Petroleum (LON:FPM), Kingfisher (LON:KGF), Mar City (LON:MAR), ProPhotonix Limited (REG S) (LON:PPIR), Quixant (LON:QXT), Mission Marketing Group (The) (LON:TMMG), Ubisense Group (LON:UBI). Interims: Epistem Holdings (LON:EHP), Nanoco Group (LON:NANO), Wolseley (LON:WOS). Trading Statement: Hazel Renewable Energy Vct 2 (LON:HR2A).

Economic: UK: PPI Input, BBA Mortgage Approvals, CPI, RPI, Core CPI, PPI Output, HPI, CBI Realized Sales. EU: German IFO Business Climate. US: S&P/CS Composite-20 HPI, HPI, CB Consumer Confidence, New Home Sales, Richmond Manufacturing Index.

Wednesday

Companies: Finals: Acta S.p.A. (LON:ACTA), Alliance Pharma (LON:APH), APR Energy (LON:APR), Chime Communications (LON:CHW), Dolphin Capital Investors Ltd (LON:DCI), EnQuest (LON:ENQ), Eurasian Natural Resources Corporation (LON:ENRC), Instem (LON:INS), IQE (LON:IQE), Michelmersh Brick Holdings (LON:MBH), Moss Bros Group (LON:MOSB), Marshalls (LON:MSLH), Paragon Entertainment (LON:PEL), Phoenix Group Holdings (LON:PHNX), SciSys (LON:SSY), ServicePower Technologies (LON:SVR), Vislink (LON:VLK). Trading Statement: Euromoney Institutional Investor (LON:ERM), Speedy Hire (LON:SDY), Topps Tiles (LON:TPT), TUI travel (LON:TT.). Interims: Bellway (LON:BWYA), Lamprell (LON:LAM), Leaf Clean Energy Company (LON:LEAF).

The following widely held stocks are trading in ex-dividend form on Wednesday: Schroders, Prudential, Segro, Ladbrokes, Bovis Homes, British Sky Broadcasting, Foreign & Colonial Investment Trust

Economic: EU: GfK German Consumer Climate, Italian Retail Sales, Italian Prelim CPI. US: Core Durable Goods Orders, Durable Goods Orders, Flash Services PMI.

Thursday

Companies: Finals: Churchill China (LON:CHH), Graphite Enterprise Trust (LON:GPE), IFG Group (LON:IFP), International Public Partnership Ltd (LON:INPP), JKX Oil & Gas (LON:JKX), Personal Group Holdings (LON:PGH), PhotonStar LED Group (LON:PSL), Signet Jewellers Ltd (LON:SIG). Trading Statement: Compass Group (LON:CPG), Daily Mail & General Trust (LON:DMGO), Thomas Cook Group (LON:TCG).

Economic: UK: Retail Sales, Index of Services. EU: M3 Money Supply, Private Loans. US: Unemployment Claims, Final GDP, Final GDP Price Index, Pending Home Sales.

Friday

Companies: Finals: Asia Resource Minerals (LON:ARMS), Chesnara (LON:CSN), Cathay International Holdings (LON:CTI), Futura Medical (LON:FUM), Hydrodec Group (LON:HYR), Judges Scientific (LON:JDG), Optimal Pay (LON:OPAY), Songbird Estates (LON:SBD), St Modwen Properties (LON:SMP), Tawa (LON:TAW).

Economic: UK: Current Account, Final GDP, Revised Business Investment. EU: French Consumer Spending. US: Core PCE Price Index, Personal Spending, Personal Income, Revised UoM Consumer Sentiment, Revised UoM Inflation Expectations.

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