High-flying stocks deliver trading updates as King mulls further QE

Fourth-quarter results from Booker Group will shine a light on recent trading as the cash and carry chain celebrates approval for its takeover of smaller rival Makro. Booker was handed a boost recently when the Competition Commission (CC) provisionally approved its acquisition of the 30-store chain.

Booker supplies nearly 500,000 businesses, including corner shops, pubs and restaurants from its 172 sites across the UK. The CC ruled that the enlarged group will “continue to face sufficient competition from other wholesalers”.

On Thursday the chain reports on trading for the three months to 31 March, ahead of its release of full-year profits, expected in May. Analysts expect the chain to post full-year pre-tax profits of £95.7 million, according to a consensus of ten analysts supplied by the company. That compares with £90.8m posted a year earlier.

Revenues are forecast to hit £4 billion, up from £3.6bn a year earlier. The chain also supplies Marks & Spencer, HMV, WH Smith’s shops in transport hubs and Odeon cinemas.

In its third quarter, underlying sales rose 3.1 per cent, with non-tobacco sales up by 4.1 per cent and tobacco sales up by 1.3 per cent. Booker has been held back from integrating the loss-making Makro chain while the CC investigation is ongoing.

Nicola Mallard, analyst at house broker Investec Securities, said: “The group will soon be able to press ahead with its integration plans – which will have been well-rehearsed by now – although we would point out Makro is still loss-making.” She added: “The group’s initial decision to buy Makro has been vindicated and the management can now get to work putting this new space to profitable work.”

Britons’ appetite for fast food is expected to continue driving growth at pizza delivery chain Domino’s, which updates on trading for the first three months of the year on Thursday.

While heavy snowfall affected its performance, Domino’s said it made a “solid” start in the first seven weeks of 2013, with like-for-like sales in the UK stores up by 1.6 per cent. The chain said that would have been 2.6 per cent growth without the snow.

Analysts at Numis Securities said: “We expect like-for-like [LFL] sales to have picked up over the subsequent six weeks, aided by half-term and cold weather. Over the full year, LFL sales should benefit from higher advertising, smarter marketing and further new product launches.”

Numis sees Domino’s making pre-tax profits of £50.5m for the year to the end of December, up from £46.7m in 2012. However, analysts at N+1 Singer recently downgraded the group from “buy” to “hold” on valuation grounds, arguing that its shares are likely to run out of steam after a strong run. Domino’s shares have risen by almost 100p since the end of 2012 to around 596p, giving the company a market value of close to £1bn.

Consensus figures from ten analysts, supplied by the company, predict that the group will report profits of £51.5m for the year.

Fuller planes of passengers fleeing Britain’s freezing weather are expected to boost figures from budget airline EasyJet when it updates on trading on Friday. The group, which recently flew into the FTSE 100 index, is expected to report good momentum, with analysts at Numis forecasting a “positive pricing environment”.

EasyJet’s load factor – a measure of how full its planes are – improved to 88.2 per cent in the 12 months to the end of February, ahead of the 87.8 per cent rate seen a year earlier. Passenger numbers were also up 7 per cent to almost 60 million over that period.

Ahead of EasyJet’s update for the six months to 31 March, Numis believes its winter trading has been boosted by the weather, sending Britons abroad in search of warmer conditions.

Numis analyst Wyn Ellis said: “We believe that the ski season was strong and the very poor weather in the UK has provided a significant boost to recent bookings. Consequently, we expect a positive update on recent trading, an encouraging outlook statement and consider that there is a strong possibility that full-year guidance will be upgraded.”

The carrier has guided the City to expect a loss of £50m to £75m over the six months to 31 March, compared with the £112m loss reported a year earlier. Airlines traditionally report losses over the weaker winter period.

EasyJet was promoted to the blue-chip index last month after a strong run for its shares, which are up 40 per cent this year. The Luton-based airline, which joined the stock market in 2000, has benefited from improved operational performance and the launch of allocated seating.

It has consistently beaten City expectations for profits, but a long-running war of words with founder and major shareholder Sir Stelios Haji- Ioannou has overshadowed some of its recent success.

In economic news, Bank of England Governor Sir Mervyn King enters the final throes of his tenure facing a make-or-break decision on whether to pump more cash into Britain’s ailing economy. Analysts believe the outcome of this week’s meeting of the central bank’s monetary policy committee (MPC) rests on a knife edge as policymakers juggle a raft of conflicting economic data.

King, who will be replaced by Canadian Mark Carney at the start of July, has voted for more quantitative easing (QE) at the past two MPC meetings, but other members have expressed concerns that additional stimulus could stoke inflation.

A trio of purchasing managers’ index surveys spanning the construction, manufacturing and service sectors are due to be released between today and the conclusion of the MPC meeting on Thursday and could prove crucial to the decision-making.