The Week Ahead: Standard Life, Balfour Beatty, Cineworld and Michael Page due to report

THE busy period for company results will continue this week with half-year figures due from Standard Life, Balfour Beatty and Cineworld.

The squeeze in the banking sector will dent profits at one of the UK’s biggest recruitment firms on Monday.

Michael Page International, which employs 1,200 people in the UK, has seen its shares fall 30% over the past year as lenders have shed staff amid the slowdown in the global economy and increasing regulation.

With Lloyds, HSBC, Barclays and Royal Bank of Scotland all having announced job cuts over the past two years, banking contributed 8% to group gross profits in the second quarter of 2012, down from 11% a year ago as earnings from its finance and accounting division dipped 12.7%.

And in the UK, which accounts for nearly a quarter of the group’s profits, the tough conditions in the financial sector drove a 9.2% fall in profits to �31.1 million.


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Michael Page has already reported a fall in gross profits over the first half of 2012 but will reveal on Monday how much the deterioration in trade has hit its bottom-line, while the City will be on the look-out for any comments that conditions are beginning to improve.

Numis analyst Steve Woolf expects pre-tax profits to fall 26% to �34 million in the six months to June 30 after net fees dropped 3% to �277 million.

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He said shares have remained resilient in recent months because the company remains well placed to benefit from any eventual recovery in the economy.

In the meantime, it is hoping to offset the slowdown in banking through its exposure to other more buoyant sectors such as oil and gas.

Life and pensions group Standard Life will report a resilient performance in the UK on Tuesday as it benefits from an ageing population and new legislation.

The Edinburgh-based business, which has more than six million customers and is one of the UK’s biggest corporate pensions providers with a market share of more than 19%, is expected to report UK underlying profits rose 6% to �92 million in the first half of 2012.

Its strong performance is being driven by the popularity of its DIY-style self-invested personal pension (SIPP) products, while the company is also being helped by lower commission costs as more IFAs switch to fee-charging ahead of the forthcoming overhaul of retail distribution rules at the end of 2012.

Standard Life is focused on working with IFAs who are best placed to prosper in the new market environment, allowing it to grow its intermediary market share without incurring the cost of commission on new business.

However, the overall group is expected to report a 3% fall in underlying profits to �254 million, as the result of a weak performance in its Canadian arm, which is forecast to see profits shrink 17% to �85 million.

This will be partly offset by rapid growth in emerging markets such as China, which will help the international division grow profits by 37% to �26 million.

Assets under administration are expected to rise 2% to �204.2 billion, but new sales are set to reduce 9% to �10.2 billion.

Shares in Standard Life have made steady gains in the past year amid expectations that it will gain from the UK’s rising life expectancy and Government changes to increase the proportion of the population saving for retirement.

It has said the UK represented an “exciting market with great potential”. Last year, 17% of the population were aged 65 and over and this is expected to increase to 23% by 2033.

However, among factors affecting insurers in the UK, new business has slowed as customers choose to defer retirement rather than crystallise market losses in the current environment.

Balfour Beatty is expected to defy the gloom surrounding the construction sector and unveil robust results in its half-year results on Wednesday.

The group, which worked on high-profile projects including the Olympics Aquatics Centre and Crossrail in London, is expected to report an 8% increase in underlying pre-tax profits to �149 million for the six months to June 29.

The construction sector, according to official figures, had a dismal first half, dragging the economy into the longest double-dip recession since the 1950s.

But analysts expect 103-year-old Balfour to reassure the market with solid results, a positive outlook and higher interim dividend.

The past weeks have seen several announcements by the UK government and other regulators on infrastructure investment plans and plans to support infrastructure lending.

While the announcements are unlikely to have any meaningful impact on contractors’ top line in the next 12 to 18 months given their longer term focus, the spending figures are significant.

Manu Rimpela, analyst at Deutsche Bank, said: “These are clearly positive steps in the right direction and highlight the long-term potential in the UK infrastructure market, from which Balfour Beatty is well positioned to benefit.”

The Government said it will underwrite up to �40 billion of construction projects, while Ofgem plans to spend �22 billion by 2021 and the rail investment target for 2014 to 2019 has been increased by �4.2 billion.

The group’s shares are about 6% higher than they were at the start of the year.

Balfour operates in more than 80 countries and provides infrastructure services covering financing, planning, design, construction, maintenance and support.

A resurgent new car market is set to drive record half-year sales at car dealership Lookers on Wednesday.

The group, which has more than 120 franchise dealerships selling 31 marques, has seen its share price increase 30% since the start of 2012 after sales of new cars returned to growth and it outperformed the market.

When the group last updated the City, in May, it said it had enjoyed an excellent first quarter of 2012, with new car sales up 6% and used car volumes ahead 11%.

Since then, industry figures for the new car market have suggested that people have shrugged off austerity Britain and returned to car showrooms in force.

Figures from the Society of Motor Manufacturers and Traders showed sales jumped 9.3% to 143,884 in July, representing the fastest rate of growth for two years and the fifth month of growth in a row.

Total sales in the first seven months were 3.5% higher at 1.2 million and the trade body raised its full-year forecasts by 30,000 to 1.9 million vehicles.

Lookers, which owns the Charles Hurst brand in Northern Ireland and Taggarts in Scotland, is expected to benefit from these trends in its half-year results.

Panmure Gordon analyst Mike Allen predicts the group will outperform the industry in both new and used car sales and thinks sales of prestige cars may have been particularly strong.

He estimates that revenues will rise 2.5% to �1 billion, while underlying profits will increase 3.5% to �23.5 million, surpassing a record of �22.7 million set two years ago.

However, he said the parts business may be a cause for concern after it reported a slowdown in the first quarter.

The UK’s largest cinema operator Cineworld will look to a higher calibre film roster in the second half of the year when it unveils under-pressure box office admissions on Thursday.

The group, which has 79 cinemas and 811 screens, reported a drop in admissions for the first six months of 2012 but it was able to boost revenues by hiking prices.

This is expected to help lift pre-tax profits by 10% to �13.6 million for the six months to June, but the group is expected to reveal lacklustre trading in July.

Whilst the timing of the Olympics has hit the business, Cineworld will benefit from a strong film schedule including the latest James Bond movie Skyfall, The Hobbit and science-fiction blockbuster Total Recall.

And the group has capitalised on Olympic fever by showing major events in 3D in its cinemas, as it did with Andy Murray’s Wimbledon final against Roger Federer.

The cinema operator will be under pressure to maintain its market share after it slipped in the first half of the year to 24.7% from 24.9%.

But there are worrying signs that the 3D boom may already be over after the British Film Institute released a survey showing 3D takings were down despite a doubling in the number of films in this format.

It was hoped that the 3D format would spark a new era for cinema operators, who charge extra for the required glasses and in some cases more for a ticket.

The group will also face questions over a sharp decline in other income - which includes cinema advertising and sale of 3D glasses - after it plunged 19% in the first half period.

Total retail revenue, such as refreshments and snacks, was also 1.3% lower amid the challenging consumer environment, while advertising revenues were 11% lower.

Steve Liechti, analyst at Investec, said the shares were still worth buying as “history suggests cinema admissions are relatively defensive and more film slate driven”.

Shares in the group are 23% higher than they were a year ago.

The removal of booking fees and launch of a 10% discount for tickets booked online has boosted growth of the group’s online MyCineworld registrations.

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