As usual, Thursday is the busiest day of the week for scheduled company announcements and this week's big day looks busier than most, with big guns AstraZeneca, Royal Dutch Shell, Smith & Nephew and Unilever are all set to announce full-year results.
Integrated oil giant Royal Dutch Shell is tipped by Charles Stanley to report fourth quarter net income of $5.3bn, up from $4.1bn the year before. "In our opinion, the key look-outs in Royal Dutch Shell's Q4 [fourth quarter] results will be the cash flow and the dividend outlook," writes Charles Stanley analyst Tony Shepard.
"Shell has held the quarterly dividend at 42 cents for 3 years but the improved cash flow of the Group in 2011 and more importantly for 2012 should give it the opportunity to increase the quarterly dividend," Shepard suggests, though he is not holding out hope for a huge increase; 44 cents is Shepard's guess.
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"In addition, Shell may announce an extension of some of its strategic targets. For example, it expected to deliver a 50%-80% uplift in operational cash flow between 2009-2012, in a $60-$80 oil price environment. With its large new projects now underway, new cash flow guidance beyond 2012 could be issued," Shepard believes.
Shepard also highlights the sharp deterioration in refining markets in the fourth quarter, especially in North America. On top of that, Shell's performance will also be affected by "a weaker European gas market and higher maintenance costs in some of the Upstream activities."
Throw in some operational problems "such as the leak at the Bonga (Nigeria) offshore field" and a lack of success in Tanzania, then a higher exploration write-off is expected.
Sticking with Anglo-Dutch companies, consumer goods titan Unilever issues a fourth quarter update which Credit Suisse thinks will see similar underlying sales numbers to the third quarter.
"We have volume growth at +1.4% after +1.9% at Q3 [third quarter]. Pricing we assume continues at around 5.8%," the broker said.
Nomura Securities is going for organic sales growth of 6.2%, which would drag the full year increase down to 6.4%.
Charles Stanley thinks full year revenue will be £41.05bn, up from £38.04bn the year before, with profit before tax rising to £5.63bn from £5.21bn a year earlier.
It sees earnings per share of 144.2p, up from 133.8p the year before, and a full year dividend of 71.5p, up from tje previous year's 61.2p.
"Emerging Markets [EM] is repeatedly seen as the route to offset the weaker sales in the Developed Markets. However, our concern is that, whilst taking a footprint in the EM regions makes sense long term, it is necessary to consider what degree of margin erosion will become built into earnings. This is likely to be a significant feature as expansion into EM gathers pace," opines Charles Stanley analyst James Dawson.
"Away from food the personal care division of the group may provide a more positive outlook, although the group's refocus towards foods will deplete the significance of personal care products," Dawson added.
Medical devices maker Smith & Nephew should post fourth quarter sales of £1,115m acording to the median forecast from the range of estimates from the legion of analysts following the stock.
Credit Suisse expects the company's orthopaedics offering to continue to gain share in the replacement knees market on the back of market interest for its VERILAST technology. "On the other hand, we foresee the company to under-perform in hips. We also project advanced wound management and endoscopy to make meaningful contributions to top-line growth driven by NPWT and repair products in arthroscopy, respectively," the Swiss bank said.
INTERIMS
Energy XXI (Bermuda) (Di)
INTERIM DIVIDEND PAYMENT DATE
ProVen VCT, Robert Wiseman Dairies
INTERNATIONAL ECONOMIC ANNOUNCEMENTS
Bloomberg Consumer Confidence (US) (14:45)
Continuing Claims (US) (13:30)
Initial Jobless Claims (US) (13:30)
Producer Price Index (EU) (10:00)
Productivity (US) (13:30)
Q2
Energy XXI (Bermuda) (Di)
Q4
AstraZeneca, Royal Dutch Shell 'A', Royal Dutch Shell 'B', Smith & Nephew, Unilever
GMS
Baltic Oil Terminals
FINALS
AstraZeneca, Royal Dutch Shell 'A', Royal Dutch Shell 'B', Smith & Nephew, Unilever
IMSS
Great Portland Estates, Investec, Workspace Group
AGMS
Avon Rubber, Compass Group, Edinburgh Worldwide Inv Trust, Numis Corporation, Standard Life European Private Equity Trust
UK ECONOMIC ANNOUNCEMENTS
PMI Construction (09:30)
FINAL DIVIDEND PAYMENT DATE
WH Smith
jh
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