Ahead of the last Bank of England Monetary Policy Committee rate decision of 2017 on Thursday, the latest UK consumer price index inflation numbers will be unveiled on Tuesday and MPC members will be hoping it stays at the 3% level hit for a second month running in October, or even fall back.
The BoE raised rates for the first time in nearly a decade in November in an effort to curb rising inflation but said it expects "very gradual" further increases over the next three years.
The policy announcement on Thursday, therefore, it is expected to see the central bank stand pat on interest rates this month, with the focus to be on whether it provides any hints about future rate hikes in its statement.
US boost expected for Ashtead
The final two-day Federal Reserve Open Market Committee meeting of 2017, kicks off on Tuesday and is widely expected to lead to another hike in US interest rates as the economy across the Atlantic continues to recover well.
The main boost for companies with exposure to the US, however, has come more from the recent Congressional backing for President Trump’s tax reform plans, with blue chip equipment hire firm Ashtead Group PLC (LON:AHT) expected to be among those benefitting.
Ashtead, which will report its first half results on Tuesday, earns around 90% of its revenues from the US and it is expected to have got a lift from repair and maintenance work following a devastating hurricane season in August and September.
The market is expecting the FTSE 100 listed firm’s underlying earnings (EBITDA) to be around £907mln, although the fluctuating value of the dollar introduces an extra element of guesswork into the equation.
Analysts at Numis Securities, who are forecasting the group’s first half adjusted pre-tax profit to be £560mln, up 18% year-on-year, thinks things could be about to get better still, stateside, for Ashtead.
They said, in a recent note: “The Senate's passing of its tax reform bill brings the prospect of a cut to corporate tax rates another step closer. While the timing and magnitude of these cuts remains as yet unclear, Ashtead would be a clear beneficiary.”
Transitional year for Balfour Beatty
Construction contractor Balfour Beatty plc (LON:BBY) will issue a trading update on Tuesday, which Numis says is traditionally a very short comment, and the broker expects more of the same this year.
In a preview, Numis analysts said “2017 has been a transitional year” for the FTSE 250 listed firm, but 2018 is an important year, with Balfour Beatty’s management having flagged a return to industry standard margins which - on the broker’s estimates - suggests 75% growth in earnings per share.
They concluded: “We would expect a comment from management to reinforce this target which - coupled with balance sheet strength - underpins our view that Balfour Beatty offers the greatest recovery profile in the sector coupled with the strongest balance sheet, so that issues elsewhere in the sector have little bearing on the group recovery profile.”
Carpetright on the floor but recovery hoped for
Carpetright PLC (LON:CPR) also reports interim results on Tuesday with investors braced for a downturn in profits but hopeful that there are better signs from the first few weeks of trading in the second half.
In a preview, Neil Wilson, senior market analyst at ETX Capital, said: “Full-year results in June were a bit of a horror show. Statutory profit before tax dived 93% to £900,000, while underlying operating profit fell 20% to £16.4m.”
He added: “The trading update of October 24th was mildly encouraging but showed management is betting big on a strong second half. With visibility of the first few weeks of trading in H2, tomorrow’s interim results should be a chance for management to update the market on whether it’s on course to achieve the desired uplift.”
Wilson pointed out that the most bearish estimates suggests Carpetright’s first half profit will have fallen by around 40% to around £3mln, well below last year’s £5mln outcome.
Abzena nearing the point of maximum EBITDA losses
Small cap life sciences group Abzena plc (LON:ABZA) will also unveil interim results on Tuesday, a day after it announced a contract with a US biotech company and long-time customer worth more than US$5mln.
Analysts at Numis expect Abzena’s interim to show continued top-line growth in chemistry and biology services and will also be looking for an update on progress of its manufacturing capacity increases in the US and early signs of a step-up in manufacturing services revenues - though this is likely to be more second half weighted.
The analysts expect Abzena to be nearing the point of maximum EBITDA losses and look for an update on the pipeline and order book at the half year point to provide some visibility of this starting to turn around in the second half.
Significant events expected on Tuesday December 12:
Trading updates: Balfour Beatty plc (LON:BBY), Drax Group PLC (LON:DRX), Joules PLC (LON:JOUL)
Interims: Ashtead PLC (Q2) (LON:AHT), Abzena plc (LON:ABZA), Begbies Traynor Group PLC (LON:BEG), Carpetright PLC (LON:CPR), Polar Capital Technology Trust PLC (LON:PCT)
Finals: Driver Group PLC (LON:DRV), Pressure Technologies Plc (LON:PRES), Zytronic PLC (LON:ZYT)
Economic data: UK CPI, RPI, PPI inflation; US producer prices