Further losses at British Airways and results from M&S top next week's schedule.
How confident we feel about the future can play a large part in any economic recovery. Indeed, it is estimated that two-thirds of the UK economy depends on consumers feeling confident enough to spend money.
According to Nationwide, the confidence barometer in September was at its highest since April 2008. Next week, we will find out whether our confidence has been dented by news that the promised recovery in third-quarter GDP figures did not take place. The US, Germany, Japan and France have emerged from recession.
Air Turbulence
Both Ryanair (LSE: RYA) and British Airways (LSE: BAY) will be hoping for a rapid return of consumer confidence because they are currently flying under dark economic clouds. The low-cost Irish operator is expected to fare the better. It should report a 12% rise in half-time passenger numbers on Monday. Profits could be modestly higher than last year too.
However, British Airways, which reports on Friday, is expected to announce further losses. The airline has been taking action to lessen the impact of the economic crisis. These have included cutting flights, axing management bonuses and even ditching complimentary hot towels for passengers on short-haul business class flights. BA will also have to contend with a doubling of Air Passenger Duty next year. Meanwhile, shareholders may have a long wait for dividends to be reinstated as losses mount.
Man Alive
Dividends are unlikely to be an issue when Man Group (LSE: EMG) reports interim results on Thursday. Pre-tax profits are expected to be in the region of £280m, more than double the previous six months. However, they will still fall short of last year's first-half profit of £622m. Currently the shares, which cost 308p, are yielding 9%, which suggests investors may not be entirely convinced the payout is sustainable.
There are no hints of scepticism at Associated British Foods (LSE: ABF). The company's sugar business has had a good year thanks to sweet-toothed Europeans. Groceries are performing well too, driven by Allied Bakeries and Twinings. But Primark is likely to be the highlight on Tuesday. Profits at the budget retailer are expected to be well ahead of last year.
By George!
Marks & Spencer (LSE: MKS) will not be pleased that it has been overtaken by George at Asda as the largest clothing retailer in the UK. According to market researcher TNS, George has a 10.1% share of the market, followed by Primark with 9.9% and M&S on 9.8%. On Wednesday, M&S will report interim results that should show a modest increase in group revenues. International sales should have grown strongly, but they only account for 10% of total sales.
The faintest whiff of demerger activity invariably gets traders' juices flowing. In the case of Cable & Wireless (LSE: CW.), such a rumour has sent the shares scampering 7% higher in recent days. It seems there are high hopes that C&W may announce plans to cut loose its international business when it reports half-time results on Thursday. Buoyant market conditions may prompt C&W to revive the £3.6bn demerger that was shelved last year.
Cleaning Up
More changes may be afoot at Unilever (LSE: ULVR), too. The company recently offered to splash out $1.9bn for Sara Lee's personal care and European detergent business. Boss Paul Polman believes there may be more bolt-on opportunities. He said there are good brands out there and that there will be more consolidation than before. Unilever reports third-quarter results on Thursday.
Look out for further developments at Lloyds Banking Group (LSE: LLOY). The bank has been given the go-ahead by the European Union and the Treasury to raise £20.5bn to shore up its balance sheet. If a £13.5bn rights issue goes ahead, it would be the largest in UK corporate history.
Finally, house prices are on the rise again. According to Nationwide the price of a typical house in the UK, which now stands at £162,000, is higher than a year ago. Halifax is expected to provide its version of events next week.
Notable results and updates
Monday: BowLeven, Chloride and Ryanair
Tuesday: Associated British Foods and Umeco
Wednesday: Logica, M&S, Taylor Wimpey and JD Wetherspoon
Thursday: Cable & Wireless, Invensys, Man Group, Unilever and Vedanta
Friday: British Airways, Rentokil Initial, Smith & Nephew and Tate & Lyle
David owns shares in Unilever and shops regularly at Primark.
