Date: Thursday 08 Mar 2012
LONDON (ShareCast) - Temporary power solutions provider Aggreko has been doing very well out of an increasing number of ever larger spectator events, such as the Olympics and the World Cup, but most of those seem to take place in even numbered years, so 2011 may not be a real bonanza year for the Scottish firm.
Nevertheless, revenue is still expected to rise to £1.6bn from £1.2bn in 2010, while profit before tax is seen rising to £365m from £307m the year before.
Charles Stanley is below consensus with its profit before tax forecast of £325m, and also takes issue with the market consensus view of a full year dividend of 24.06p; it predicts a more meagre pay-out of 21p.
It notes that the last trading update did include a dose of caution about the outlook for the second half of 2012 "but Aggreko has continued to surprise on the upside so these comments appear to have been ignored for the time being."
"Furthermore," notes Charles Stanley analyst Tony Shepard, "Aggreko has started 2012 strongly with 20% more equipment on hire in the International Power Projects and good momentum in the Local business."
"The first half [of 2012] is expected to show a continuation of strong trading but any downturn in economic activity is more likely to be felt in the second half and the comparatives are tougher," Shepard notes.
Pubs group JD Wetherspoon, famed for its cheap grub and wide selection of real ales, brings out interim results on Friday. Panmure Gordon is forecasting profit before tax of £33.9m, earnings per share (EPS) of 18.1p and a 4.2p interim dividend. It thinks 2012 trading will have been flat, "reflecting a difficult February and a tough comparative of +2.8%."
Peel Hunt is forecasting £34.7m and EPS of 18.7p. "LFL [like-for=like] sales for H1 [first half] will be c+2.5%, given Q2’s [second quarter's] strong showing at +3.6%, which was on top of a strong comparative of 3%. We would expect at least 2.0% in the current period against slightly weakening comps [comparatives]," the broker said.
"This will not be the moment for upgrades, judging from management’s very cautious stance at pre-close, but we believe the margin caution that is now built into forecasts (we are close to consensus now, assuming only 9.0% operating margin and zero LFL growth this year) will equip the brand for some pretty tough street-fighting in the months ahead. That is part of a strategy to extend market share by empowering Wetherspoon’s quality and value image, reinforcing the core brand values in customers’ eyes." Peel Hunt continued.
"Ahead of the Budget there should be another reliable tirade of protest against double standards in alcohol taxation, including threats of reducing future openings, but we do not expect a firm decision on that until finals," Peel Hunt concluded.
Charles Stanley, meanwhile, forecasts earnings before interest, tax, depreciation and amortisation of £76m on revenue of £570m. The broker predicts EPS of 17.9p.
"Whilst top line growth is anticipated, margin erosion is likely to hold back profit progress," Charles Stanley's James Dawson believes. "Guidance on margins will be a key point for determining near term expectations for operating profit forecasts," he adds.
In Dawson's view, Wetherspoon is unlikely to update guidance on the number of planned sites for the current financial year, having already indicated it plans to open around 50. However, he notes that the interim results often "tend to disclose more detail on the average cost per new site developed and can give an indication of the relative pricing power that JDW [Wetherspoon] is able to exert over construction suppliers. A significant spike up in the average cost of refurbishing new pubs could be the catalyst to curtailing the full year opening target, although we do not anticipate this at present."
Paving slab firm Marshalls is likely to report a robust performance in 2011 with revenues at the group up by around 8%. Panmure Gordon reckons. "Although market conditions remain challenging, we believe that the group will continue to outperform, by developing new sales channels and by product innovation," the broker said.
"Looking at the performance divisionally, we expect that Public Sector and Commercial markets will report revenue growth of 9% during the year, whilst Domestic market sales will have increased by 7%," Panmure Gordon said.
Market consensus is for profit before tax of £12.1m on turnover of £332m. EPS are tipped to surge to 5.15p.
INTERIMS
JD Wetherspoon
INTERIM DIVIDEND PAYMENT DATE
Murgitroyd Group
QUARTERLY PAYMENT DATE
Lilly (Eli) & Co
INTERNATIONAL ECONOMIC ANNOUNCEMENTS
Balance of Trade (GER) (07:00)
Balance of Trade (US) (13:30)
Consumer Price Index (GER) (07:00)
Current Account (GER) (07:00)
Factory Orders (GER) (11:00)
Non-Farm Payrolls (US) (13:30)
Retail Price Index (GER) (07:00)
Unemployment Rate (US) (13:30)
Wholesales Inventories (US) (15:00)
FINALS
Aga Rangemaster Group, Aggreko, Marshalls, Old Mutual
IMSS
SThree
UK ECONOMIC ANNOUNCEMENTS
Industrial Production (09:30)
Manufacturing Production (09:30)
FINAL DIVIDEND PAYMENT DATE
Avon Rubber, Pressure Technologies
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