BP set to reveal drop in profits

The City expects the oil major to report full year underlying replacement cost profits down by more than a quarter to 9.9 billion US dollars (£6.5 billion) compared to a year ago, following oil prices that have fallen by more than half since last summer.

BP in common with most of the industry has been cutting costs to weather the new low price environment of around 50 US dollars a barrel.

The firm, which employs 15,000 people in the UK, said earlier this month it would cut 300 jobs in the North Sea following a review of its operations.

And last month BP warned that plans to streamline its business will cost it one billion US dollars (£638 million) over the next year.

The restructuring bill reflects the need to slim down its operations following 43 billion US dollars (£27.5 billion) worth of divestments since the Gulf of Mexico disaster in 2010.

It is still fighting clean-up litigation as a result of the disaster that has so far cost it around 40 billion US dollars (£26.5 billion). Its share price is a third below what it was at the time of the Deepwater Horizon oil spill in April 2010.

Earlier this week rival Royal Dutch Shell said it would cut 15 billion US dollars (£9.9 billion) from its spending plans over the next three years as it responds to sliding oil prices.

The Anglo-Dutch firm added earlier this month it would abandon a 6.5 billion US dollars (£4.3 billion) plan to build one of the world's biggest petrochemical plants in Qatar with rival Qatar Petroleum.

Brokers also have concerns over BP's Russian profits in light of the fall of the rouble after Western sanctions on the Kremlin since the Ukraine crisis.

BP holds just under a 20% stake in Russian oil firm Rosneft, which it acquired when the company sold its half of the TNK-BP joint venture to the Russian company in 2013.

CMC Markets chief market analyst Michael Hewson said: "The slide in the rouble as a result of the sanctions, as well as the oil price could well equate to a particularly sharp drop in its revenues for the fourth quarter, and has raised some concerns in some quarters about the sustainability of the company's dividend, which currently yields just over 5%."

Sky will be keen to show it has the fire-power in a rapidly consolidating market when the broadcaster reports half-year results on Wednesday.

The City expects it to post interim earnings up 11% to £644 million, as it picked up just over 308,000 new customers across Europe in the final three months of the year, including 124,000 in the UK.

Brokers at Jefferies said Sky's figures will have been helped by its subscription-free NOW TV, which has given it access customers who cannot usually afford lengthy subscription fees.

This week Sky said it would enter the mobile phone sector in 2016 in a partnership with O2 operator Telefonica, the latest in a series of deals and takeovers shaking up the mobile and broadband industry.

The move comes days after Spain's Telefonica said it was in talks over a £10 billion deal to sell the O2 network to Three owner Hutchison Whampoa, creating a combined business that will be the UK's biggest mobile player. It is understood that Sky's agreement is unaffected by the Hutchison deal.

These deals come after rival BT - with which it competes over broadband and telephone customers as well as TV football - announced last month it was in discussions to buy Britain's current biggest operator EE for £12.5 billion.

The main players in mobile and broadband are engaged in a round of deal-making as they vie to offer customers services that include both those services as well as fixed line and TV, in a strategy described by analysts as "quad play".

Sky, which has around 11.5 million UK customers, said it was already the UK's most popular "triple play" provider with almost 40% of its customer base now taking all three of its TV, telephone and broadband services.

Dominic Baliszewski, a telecoms expert at price comparison website broadbandchoices, said: "This is further proof of the UK's inevitable shift towards "quad play" services - broadband, mobile phone, TV and home phone - but it remains to be seen how quickly customers will adopt these new bundles."

Last November, Sky changed its name from BSkyB after it completed the acquisition of Sky Italia and a majority interest in Sky Deutschland. The enlarged company now serves 20 million customers in three of Europe's four biggest markets.

This will be the first time the results of all three territories will be combined. However, brokers at Goldman said: "We believe that the key feature of the results will be a strong UK performance."

Ocado is expected to deliver the first profit in the online grocer's 15-year history when it posts its full-year results on Tuesday.

Numis expects the firm, which delivers goods for both Waitrose and Morrisons, to post a pre-tax profit of £11.2 million following successful Christmas trading which saw sales jump 14.8%.

But the group that was founded in 2000 faces increasing competition from the online operations of major supermarkets as their price war with the discounters threatens to impact Ocado's future sales.

Last month chief executive Tim Steiner said: "We are pleased with the continued steady growth in our business against the backdrop of a more competitive grocery market."

Mr Steiner said he expects "the retail environment to remain challenging."

Ocado is some 18 months into a £170 million 25-year partnership with Morrisons, which earlier this month ousted its chief executive Dalton Philips.

Its long-running deal with Waitrose allows the upmarket grocer to pull out in September if it wishes. The market is unsure whether Waitrose will continue with Ocado or decide to wholly run its own online operations.

But analysts say that smaller grocery players may suffer as the industry continues to cut prices.

John Ibbotson, director of consultants, Retail Vision, said: "The deflationary environment we seem to be entering could have a devastating effect on Ocado."

Mr Ibbotson added: "Ocado's store-based competitors, with their lower costs, are closing in."