Market Watch: Analysts await Rolls-Royce fallout

ROLLS-ROYCE is likely to provide more details on the cost of dealing with the aftermath of an engine explosion on a Qantas superjumbo when it reports full-year results on Thursday.

But the company's profits are still expected to exceed those of the previous year following strong performances in its marine and defence divisions

The firm is poised to report a 3 per cent rise in pre-tax profits to 945 million in 2010 and an 8 per cent increase in sales to 10.9 billion, despite the investigation and remedies required following the Quantas incident, according to analysts.

One of the Derby-based company's Trent 900 engines caught fire in mid-air between Singapore and Sydney. Rolls quickly identified the cause of the problem and agreed a series of inspections.

While the cost to the UK firm has yet to be revealed, the engines giant admitted the response would lead to "slightly lower" underlying profits growth, compared with previous forecasts of 4 to 5 per cent.

Strong demand in emerging markets is expected to boost full-year results from household goods giant Reckitt Benckiser, which are due out on Wednesday.

The firm said in November that it was targeting annual growth of 6 per cent in revenues and a 16 per cent rise in net income despite a lacklustre performance in Europe.

The Slough-based company, which recently completed its acquisition of Durex and Scholl owner SSL International, reported a 16 per cent rise in third quarter profits to 426m due to strong sales in emerging markets, while revenues in Europe were flat at 843m.

Hip and knee replacement maker Smith & Nephew, which reports full year figures on Thursday, has seen its shares jump to all-time highs in recent weeks on rumours of takeover interest.

Despite denials by S&N that it is in discussions, shares have remained at record highs as speculation refuses to die down.

Many brokers are unconvinced that a bid will transpire, but are hopeful of trading for the year ahead.

Most analysts are expecting Hull-based S&N to report fourth quarter trading profits of around 155.6m on revenues of 642m.