Boots' performance under scanner

Boots' performance under scanner

	Published : Tue, 25 Oct 2005 09:05 By : James Rowe Print this Story

LONDON: Investors are keenly watching the half-year results of Boots Group Plc., which is in talks with Alliance UniChem in a 7 billion-pound merger.

They are evaluating whether the healthcare products maker has indeed been able to stop the loss in sales and whether their announced plans of cost-cutting had indeed any effect on the bottomline. Analysts believe Boots will be in for a substantial deficit and its full-year turnover could well be down by as much as 80 million pounds.

The merger plan secured the approval of the competition authorities and once formalised, it will see an entity with more than 2,200 stores across the U.K. Boots had sold its OTC business to Reckitt Benckiser for 1.9 billion pounds to secure the regulatory approval.

Analysts have not been soft on Boots ever since the announcement of the merger plan. Many have said it is not going to achieve the intended benefits. Boots has also been affected by competition from supermarkets in some of its product range.

The two companies have said in justification of the merger that it will save the 100 million pounds a year in costs.

Besides Boots, analysts are following Reckitt Benckiser (in view of the purchase of Boots OTC business and its forecast that it will maintain the profit line) as well as GlaxoSmithKline and AstraZeneca. All of them are about to come out with the third quarter results.

Meanwhile, investors have not lost any faith in the oil sector giants, BP and Shell, although forecasts indicate their margins will be slightly affected.

In the US, the stock on watch is Microsoft. Analysts have predicted decent growth from the company, although, earlier this month the software company agreed to pay RealNetworks $761m to settle a lawsuit over the bundling of Microsoft software.

In Europe, the Competition Commission's final ruling is expected on Paris-based Euronext's acquisition bid for the London Stock Exchange. Euronext may be asked to reduce its voting rights in clearing house LCH Clearnet if it wants to proceed with the plan.