City thirsty for disposal news as Whitbread serves up strong profits

Pubs and leisure group Whitbread is expected to post a solid set of annual results tomorrow after it said in February that a strong performance at its Premier Travel Inn division should see profits hit the top end of expectations.

Analysts' forecasts put pre-tax profits for continuing operations for the year to end-February in the range of 204 million to 212m, up from 181.1m in 2005.

The City will look to see if the group has anything to add on the subject of disposals, after the firm found itself at the centre of the takeover speculation last month, with its David Lloyd Leisure arm cited by analysts as the most likely of all the divisions to go.

However, there is a wider feeling that Whitbread would be unlikely to initiate a further break-up of the business after it sold off more than 200 pubs, its 50 per cent stake in Pizza Hut and its 45-strong chain of TGI Friday's during the year to concentrate on its core businesses.

Drugs major GlaxoSmithKline is set to update the market on its first-quarter trading performance on Wednesday.

Consensus forecasts put sales for the 13 weeks to end-March at 5.68 billion, compared with 5.81bn in the year-earlier period, with pre-tax profits slipping from 2.17bn to 2.02bn.

The company said a 16 per cent rise in sales in the US helped boost revenues during 2006. However, the strong pound is expected to show some impact on earnings at the firm, with analysts forecasting a slide of up to 2 per cent.

Glaxo is also expected to have taken a knock from an increase in US competition to its anti-nausea drug Zofran, antidepressant Wellbutrin and allergy treatment Flonase.

Associated British Foods reports tomorrow, and Cazenove expects the firm to post adjusted pre-tax profits for the six months to 3 March of 265m, up from 255m in the same period a year earlier.

ABF saw full-year profits decline 4 per cent after it was hit by the impact of the European Union sugar reform and higher wheat prices in its bread business. However, strong growth at Primark and an increase in store space at the chain coupled with a pick-up in sugar prices and a heavy advertising campaign for Kingsmill bread should see a more positive outcome for the current year.

The launch of new games consoles should see gaming retailer Game Group post a strong rise in profits on Wednesday.

The group upped its profits target in January after strong sales of Nintendo Wii, Nintendo DS and X-Box 360 consoles helped it secure a better-than-expected Christmas trading performance.

Following a 15.4 per cent rise in like-for-like sales in the 49 weeks to 6 January, the company said it was set to beat market predictions of full-year pre-tax profits of 23m. It added that profits should come in somewhere in the region of 28m to 30m.

A consensus of 11 analysts' forecasts puts the figure at 29m for the year to 31 January, compared with 8.4m in the previous full year.

With strong like-for-like sales expected to drive growth at home, investors are not expecting Game to change significantly the number of its UK stores - currently about 400.

Toy distributor Character, which reports interim results tomorrow, has enjoyed a strong start to the year, boosted by the popularity of the TV series Doctor Who.