Market Watch: City on tenterhooks as big firms file results

Transport group National Express expects to show "good progress" in boosting half-year profits on Thursday thanks to a major cost-cutting drive under former Tube Lines boss Dean Finch.

Finch is getting to grips with the tough task of reviving the business following a disastrous year for its rail arm, which returned its loss-making East Coast franchise back to the UK government in November.

At this stage last year, the East Coast deal sent the firm plunging into the red with a 48.1 million pre-tax loss. But a cost crackdown by the new chief executive is helping shore up results, while the firm says revenue trends are "resilient".

The company has also had some good news since the election after the coalition extended its remaining East Anglia and c2c franchises - which it was due to lose next year - while it reviews the system.

In the group's bus business - which operates in Dundee and the West Midlands - Finch is cutting driver wage costs and running routes more efficiently to save fuel costs.

Bank of America/Merrill Lynch analyst Mark Manduca forecasts pre-tax profits of 155.6m for the full year, 34 per cent ahead of 2009.

Centrica, which owns Scottish Gas, will see profits from its residential business almost double in results for the first half of the year as shivering households cranked up the heating during the bitterly cold winter.

Citigroup analyst Peter Atherton is expecting operating profits of 583m from British Gas for the first six months of 2010 - up from 299m last time - with its business division also forecast to double profits to 132m.

Although the high profits on Wednesday are sure to spark anger in some quarters, Centrica says a reasonable level of returns is needed to invest in new sources of production.

Friday's update from British Airways will reveal the impact of a nightmare first quarter for the airline, which has already said that it "could hardly have had a worse start" to the year.

The opening three months of BA's financial year saw it hit by ash clouds from Iceland's volcanic eruption, which closed most of European airspace for almost a week in April, as well as crippling strike action.

BA has already lost around 120m from the volcanic dust disruption, while it said the first wave of industrial strikes cost it 43m - with the group widely thought to be facing a total bill from the disputes of 150m.

Both British Sky Broadcasting and telecoms giant BT report on Thursday, but the figures come at a tense time for relations between the two firms.

BT, which reports first quarter figures as BSkyB posts annual results, announced earlier this month that it was slashing the cost of watching Premier League football to as little as 6.99 a month in a major push into the pay-TV market.

But in a canny move, rival BSkyB increased prices for its sports customers from September in a move triggering higher charges for wholesale customers such as BT.

BSkyB said the increase reflected higher investment in Sky Sports following the start of a new broadcast contract with the Premier League. However the increase is likely to mean that BT suffers big losses on providing its sports coverage.

BT's price cut comes after it was allowed to offer Sky Sports in the wake of a ruling by communications watchdog Ofcom that BSkyB must sell its premium sports content to rivals at regulated prices.

BSkyB is taking legal action over the Ofcom ruling but in the meantime it has agreed to sell the channels at a price agreed with the regulator.

With the pay-TV issue aside, BSkyB is expected to report underlying operating profits up 9 per cent to 851m.

BT's trading update is also likely to show continued progress as the group continues to turn around its Global Services arm.

Analysts expect the group to have held first quarter underlying earnings flat year-on-year at 1.37 billion - an improvement seen on the 3 per cent fall a year earlier.

BT is battling to revive its fortunes as it also faces the burden of a mammoth pension deficit. The group recently announced customers will have to pay more for phone calls.

n E-mail your questions to our panel of experts at [email protected]

Readers should seek independent financial advice before taking action. Replies to readers' queries are offered on the basis that no legal liability is created thereby.