A week in advance. 16th June - 20th June 2008
By Keith Bowman | 13 Jun, 2008
This coming week sees a continued flow of both UK corporate and economic announcements, whilst in the USA, economic indicators are likely to remain in the spotlight.
Economics
In the UK, the prospects for inflation (rising prices) remain in focus, following last week’s record factory input prices. Tuesday sees the release of the wider inflationary indicator, the Consumer Price Index (CPI) covering the month of May. The annual CPI rate jumped during April, with the rate climbing to a level just below that which triggers a letter from Bank of England governor Mervyn King to the Chancellor of the Exchequer. The CPI inflation rate for April hit the 3.0pc mark, sharply up on March's 2.5pc and just below the 3.1pc level requiring a letter of explanation to the Chancellor. With industry input prices remaining extremely elevated, pushed up by a continued rise in the price of oil, few economists will be surprised to see the May data come in higher than the 3.0pc ceiling level, triggering what would prove to be the second letter of explanation by the Bank of England governor to the Chancellor in a little over a year.
In the USA, inflation also remains in focus with the release of Producer Price Indicators (PPI) or factory input prices as they are often called, on Tuesday. Like the UK, US factory input prices have also recently proved pressured via higher energy prices. Furthermore, in the US, upward pressures may also have been magnified by the falling US dollar, which will have been making raw material prices more expensive. Also on Tuesday, although potentially having benefited from a falling US dollar, industrial production figures are due, whilst again on the same day, further US housing data is expected to be released.
Companies
On the corporate front, the UK’s biggest hospitality company, Whitbread, is due to provide its latest trading update on Tuesday. The group which owns budget hotels Premier Inns, pub and restaurant operators Brewers Fayre and Beefeater, along with coffee shop chain Costa Coffee, provided positive outlook comments with its full year results back in late April(08). Along with enjoying a 26.3pc increase in pre-tax profits before exceptional items, management also noted that since the start of the group’s new financial year, trading had proved ‘encouraging’. The strong performance was largely driven by a record year for Premier Inn, where 3400 rooms had been added and sales had increased by 15.1pc. Furthermore, thanks to the unfolding credit crisis and rising consumer caution, the group may also have been benefiting from a degree of trading down by consumers. As for the pub and restaurant business, the division continued to enjoy increased efficiencies on the back of restructuring measures implemented, whilst Costa Coffee also expanded its store numbers. Ahead of the update, market consensus opinion remains positive in tone.
Staying on the high street, although moving across to the supermarket arena, J.Sainsbury is scheduled to release its first quarter trading update on Wednesday. The group’s 2007 full year results released back in mid May, saw further sales progress continuing to be made, with like-for-like sales (ex-fuel) up 3.9pc, although investors broadly concentrated on what was viewed as a cautious outlook statement by management. However, no current trading update was given at the time, with investors being left to wait for this coming first quarter statement. With large shareholdings continuing to overhang the stock following previously failed takeover attempts, market consensus opinion is currently negative in tone, with analysts broadly struggling to identify a catalyst for the shares in the near term.
Other corporate announcements expected over the course of the week include results and trading updates from general retailer Woolworths, gas and electricity supplier Centrica and transport operator Go-Ahead Group.
Week Ahead Diary
Trading Updates
Monday – n/a
Tuesday – Whitbread
Wednesday – J.Sainsbury, Woolworths
Thursday – Centrica, Go-Ahead Group
Friday – n/a
Full Year Results
Monday – n/a
Tuesday – Halma
Wednesday – RPC Group
Thursday – n/a
Friday – n/a
Economic Diary
Monday – n/a
Tuesday – UK Consumer Price Index (Inflation) data, US Producer price data, US Industrial production data, US Housing start data
Wednesday – Bank of England interest rate policy meeting (June) minutes,
Thursday – UK Retail sales (May)
Friday – n/a
Note: This list represents what we believe are the highlights of the coming week and is not an exhaustive list of company announcements or economic events. Source: Digital Look.
