Oil and drug firms dominate next week's results line-up.
The news in recent weeks has primarily been about economic recovery hopes and bank profits. Next week, the spotlight will turn from city bankers filling their boots with obscenely large bonuses to oil titans stuffing their coffers on expensive crude.
Goldman Sachs has said oil prices, which have more than doubled this year, could rise further. It reckons prices could hit $85 by the end of 2009, which could squash the tender green shoots of "you know what". The AA believes such a rise could add nearly £1.80 to the cost of filling the average car.
Oil's Well
Next week BP (LSE: BP) and Royal Dutch Shell (LSE: RDSB) will defend their corner when they report third-quarter figures on Tuesday and Thursday respectively. BP recently said it will stick with its capital expenditure plans despite a sharp rise in crude prices. When asked what it thought was driving crude prices, the company said it was the strength of the euro and the weakness of the dollar.
BP's exploration efforts appear to be paying off handsomely though. It has made its nineteenth oil discovery in Angola and a giant find in the Gulf of Mexico too. However, Royal Dutch Shell, which is more involved with downstream production, said output in Nigeria is being affected by violence in the region. It reckons production there may be down by half.
Meanwhile, BG Group (LSE: BG), which reports on Wednesday, may comment on speculation that it is looking to sell its portfolio of power generators. The disposal would beef up its balance sheet following a £6.7bn acquisition of Australia's Origin Energy last year.
Pig Sick
Interestingly, Invesco Perpetual's star fund manager, Neil Woodford, has sold his entire stakes in BP and Shell but retained a stake in BG Group. Woodford said GlaxoSmithKline (LSE: GSK), which reports third-quarter numbers on Wednesday, has a better dividend cover than the oil majors.
The drug giant is expected to benefit from demand for its swine-flu medicine and vaccine. It believes demand for the drugs could boost revenues by £3bn this year. The first wave of mass vaccinations against the H1N1 virus has already begun in the UK, with frontline workers and high-risk patients getting first dibs.
AstraZeneca (LSE: AZN) will also report third-quarter numbers on Thursday next week. The company recently announced layoffs in the US in response to blockbuster drugs that will lose patent exclusivity. The US patent for ulcer drug Nexium, which had annual sales of $5bn, is due to expire in 2014.
Cleaning Up
Reckitt Benckiser (LSE: RB) has a few medicines in its cabinet too, but that is not its main forte. Shares in the maker of products that include Cillit Bang, Mr Sheen, Calgon and Vanish have been some of the best performing over the last 10 years. The performance has been driven by investment in new products that consumers did not realise they wanted. Reckitt Benckiser will post third-quarter figures on Tuesday.
Shares in British American Tobacco (LSE: BATS) have been another standout over the last five years -- they have more than doubled. BAT, which will report third-quarter sales on Wednesday, has been embroiled in allegations that Imperial Tobacco Canada destroyed scientific evidence showing cigarettes were addictive and caused cancer.
On Friday, look out for third-quarter results from WPP (LSE: WPP). The advertising company usually has its finger on the global economic pulse. WPP chief Martin Sorrell recently said we are likely to see a "LUV" shaped recovery – Little recovery in Europe; a U-shaped one in the United States and a V-shaped one in Asia.
Notable results and updates
Monday: Friends Provident
Tuesday: ARM Holdings, BP, Prudential and Reckitt Benckiser
Wednesday: BG, GlaxoSmithKline, British American Tobacco and Wolfson Microelectronics
Thursday: AstraZeneca, CSR, Cairn Energy, Royal Dutch Shell and Standard Life
Friday: Dignity, Shire and WPP
David holds shares in BATS, GlaxoSmithKline and Royal Dutch Shell.
