Wednesday preview: BoE minutes, Logica, Rexam

22nd Feb 2011 16:37

With each month that passes the release of the minutes of the meeting of the Monetary Policy Committee (MPC) become more eagerly anticipated, as the consensus view of the rate-setting committee starts to fragment.The Bank of England's quarterly inflation report last Wednesday conceded that the central bank's inflation forecasts have been on the optimistic side, and in the view of some pundits the introduction to the report suggested that the Bank had become more open to the possibility of raising interest rates; those pundits were quickly slapped down by the Bank's governor, Mervyn King. "Some people are running ahead of themselves," King said in response to comments that the latest report may augur higher interest rates.It's a safe bet that MPC member Andrew Sentence voted for a rate rise, as he has done every month since June last year. On Thursday, he accused the MPC of being "over optimistic" about the outlook for inflation. "My judgment is that the upside risks to inflation are understated," he said in a speech at the Institute for Economic Affairs in London. "Monetary policy would most likely need to be tightened faster and by more than the markets currently expect to bring inflation back to target," he added.The question is, how many of his colleagues on the MPC are coming round to his view? For a long time Sentance was a lone dissenter to the Bank's policy of keeping the Bank's key lending rate at its historically low rate of 0.5%, but in January he was joined on the hawks' perch by Martin Weale.The minutes are scheduled to be released at 9:30 on Wednesday.On the corporate front, the likes of Logica, Rexam, Galliford Try and Travis Perkins will be trying to wrench investors' attention away from events in North Africa.Singer Capital Markets said results from Logica's peers provide an "encouraging read across" for the IT contractor's full-year results. The company's third quarter interim management statement indicated improving trends in most of the company's markets "and recent results from Cap Gemini, Atos Origin, and Tieto support the view that this improvement is likely to have continued," Singer reckons."We expect results to show that Logica is taking market share in Outsourcing which now accounts for circa 43% of sales. We believe there is a moderate chance of a beat at the results and full year 2011 estimates are looking very reasonable," the broker added. The broker is looking for revenue of £3,688m, against consensus of £3,683m, while its prediction for earnings before interest and tax (EBIT) is just £1m shy of the market consensus of £273m.Panmure Gordon predicts revenue of £3,703m, adjusted earnings before interest, tax, depreciation and amortisation of £265.1m and adjusted profit before tax of £243m.Things to watch out for in the report include any thawing in UK public sector spending, the performance of Benelux ("the sick man of Europe"), any improvement in cyclical activities ("Cap Gemini and its cyclical lines of business grew 11% in Q4 bookings," and staff economics."Logica ended Q3 [third quarter] with circa 5,750 staff in offshore geographies. Again, our long standing gripe is about slow offshore hiring, now at 5,750 staff. This is simply too few (being c15% of headcount)," the broker argues.Global consumer packaging company Rexam is another company issuing full year results for 2010. Back in November the group said trading was in line with plans, with both the Beverage Cans and Plastic Packaging divisions performing as expected, so results should not be too far from market consensus figures of £392.0m for pre-tax profit and £4,937.6m for sales.Having said that, broker Charles Stanley is some way above consensus with its profit forecast of £407m. The broker thinks "the restructuring programme in Plastic Packaging is nearing completion, and the leaner cost base will benefit the results going forward." The company may have an announcement about a sale of plastic closures business if press reports are to be believed. It's half year results for housebuilder Galliford Try on Wednesday, and Panmure Gordon thinks it will be a case of full steam ahead on the company's three-year growth plan. There will not be much of an atmosphere of expectation as the company issued a detailed trading update in January. "Within housebuilding, the group reported a 22% increase in its volume output for the half from a similar number of sites - we view this as an excellent performance given the benign market conditions, although acknowledge that a large part of this is likely to have been achieved in the early months of 2010," the broker noted. "Forward sales are 11% ahead year on year and, with around 30% more sites to come on stream by the year end, the group appears to be on track to deliver the high levels of growth in its housebuilding operations over the coming years. Underlying private prices increased by 4% in the period, although the group ASP [average selling price] is likely to have fallen slightly due to mix (more social homes completed in the period)," Panmure Gordon said.The broker thinks the group will report £30m of debt at the period end, leaving it plenty of firepower for land purchases.It's all a bit too soon for builders merchant Travis Perkins to give much of a detailed insight into how the integration of recently purchased BSS is going, though it will probably get at least a passing mention in the full year results announcement. Numis Securities says that after a strong showing in November followed by weather-related hardships in November ""there will be a focus on how January has fared and also how Travis's management sees the full year".Panmure Gordon will also be looking for clues on how the BSS integration is proceeding, but it also wants an update on how much the private sector spending recovery is offsetting, if at all, the slow down in public sector spending.The market thinks the group will unveil pre-tax profits of £214.30m on sales of £3,092.7m. Panmure Gordon is a tad in the optimistic side, going for profit before tax of £215.0m. The company has recently returned to paying a dividend; Panmure Gordon thinks the full year pay-out will be 15.0p, which is above the market consensus figure of 14.12p.INTERIMSA&J Mucklow Group, Galliford Try, RSM Tenon GroupINTERIM EX-DIVIDEND DATEDowning Distribution VCT 1, Heath (Samuel) & Sons, Mid Wynd International Inv Trust, Mountview Estate, PZ Cussons, System C HealthcareINTERNATIONAL ECONOMIC ANNOUNCEMENTSSmall Business Confidence (JPN)Consumer Prices (FRA) (06:30)Industrial New Orders (EU) (10:00)MBA Mortgage Applications (US) (12:00)Existing Home Sales (US) (15:00)Q4Yamana Gold Inc.GMSRenew HoldingsFINALSCapital Shopping Centres Group, Commerzbank AG, Gartmore Group Ltd., Logica, Telekomunikacja Polska GDR (Reg S), Travis Perkins, Yamana Gold Inc.SPECIAL EX-DIVIDEND PAYMENT DATEJersey Electricity 'A' SharesEGMSCMA Global Hedge PCC Ltd. EUR Shares, CMA Global Hedge PCC Ltd. GBP Shares, CMA Global Hedge PCC Ltd. USD SharesAGMSArmour Group, Dawson Holdings, Dunedin Smaller Companies Inv Trust, OptosUK ECONOMIC ANNOUNCEMENTSBBA Mortgage Lending Figures (09:30)BoE Interest Rate Minutes (09:30)FINAL EX-DIVIDEND DATEBarclays, Brunner Inv Trust, Charter European Trust, Chrysalis VCT, Domino's Pizza UK & IRL, Framlington AIM VCT, Henderson Opportunities Trust, Independent Inv Trust, Jersey Electricity 'A' Shares, Ladbrokes, Reckitt Benckiser Group