Analysts upbeat on Irn-Bru growth and earnings forecast

Published on Saturday 20 March 2010 12:43

ALL EYES will be on the outlook statement of Irn-Bru maker AG Barr this week when it reports results for the year to 31 January 2010.

Shore Capital expects pre-tax profits before exceptionals at 27.3 million and believes that the continued increase of distribution, consolidation of its Mansfield site and the growth of fruit drink Rubicon will support earnings growth forecasts for the next two years. With its strong cash generation, Andy Blain at Shore sees scope for acquisitions or increased return to shareholders.

On Tuesday, oil explorer Cairn Energy will bring out its preliminary report with analysts expecting good results. Charles Stanley expects net income of about $70m (46.4m) albeit exceptionals could reduce this to about $10m. Charles Stanley's Tony Shepard expects some excitement in the firm's exploration prospects for Greenland. Cairn has secured two rigs there, which has helped it accelerate its exploration programme, but it may be too early to give a definite update on the situation.

B&Q parent company Kingfisher recently raised expectations for full year results – due on Thursday – after a resilient 2009.

A tight rein on costs across the group has added to better trading, with Kingfisher telling the market that profits were expected to be "slightly ahead" of the 540m pencilled in for the year to 30 January, a significant hike on the 368m seen in 2008.

Plumbing and heating giant Wolseley's interim results on Monday come after the firm said profits would top market expectations.

Wolseley, which trades as Build Center and Plumb Center, said the improvement reflected cost efficiencies rather than better trading conditions.

Wolseley has cut 500 jobs in the last year, on top of the 10,000 shed during the previous year. The most recent cuts fell mainly in the US although the group may update on further restructuring moves in the interim results.

Analysts had pencilled in underlying trading profits of 326m for the full year before the update, although this has since moved up to 360m.

Annual results from insurer Legal & General on Tuesday will be watched for further confirmation of a rebound in the sector following a raft of recent positive comments from rivals.

L&G revealed a 7 per cent drop in worldwide sales during 2009 to 1.38bn, but this was in line with market forecasts and the firm predicted a bounce back in its core markets.

While it warned of a slow UK economic recovery and subdued housing market, L&G said its savings and protection and annuities sectors were still expected to rally, following a depressed previous year.

Analysts are expecting the cost savings to have helped L&G turn around from 2008's sharp losses of 1.49bn to pre-tax profits of 516m on an IFRS accounting basis.

But analysts at Keefe Bruyette & Woods said they were concerned over the impact of cost cutting on the business, saying "it is unclear to us whether some of this cost is coming at the expense of lower future sales because they might not be spending sufficiently on product development."

Sainsbury's reports on its fourth quarter sales performance on Wednesday after what is expected to have been a tougher three months for the group. The sector is thought to have suffered a particularly bad February and March as a result of the hike in VAT.

Coming up against like-for-like sales growth of 6.2 per cent a year earlier, Sainsbury's is only likely to manage 1 per cent growth, but the group is still on track to at least match its pre-tax profits guidance for between 590m and 595m when it reveals results in May.