Tuesday preview: Services PMI, BP, and Ocado in focus

updated: 4 February 2019 at 2:39pm Author: Alexander Bueso

(Sharecast News) - The focus on Tuesday will be on a raft of services sector survey results for the UK, US, and Eurozone covering the month of January.
In the case of the UK, expectations are for a slight dip from the prior month reading of 51.2 to 50.9.

It will be the last major economic release before the Monetary Policy Committee meets to decide on policy the following day.

On the corporate front meanwhile, by far the most important of the firms that are due to update markets on Tuesday is BP.

UBS's Jon Rigby sees a possibility that the company will extend its recently provided 2025 free cash flow figure for Upstream to the entire group.

Given recent updates on Upstream, the focus this time is likely to be on the Downstream business, Rigby also said in a research report sent to clients.

Commitments on disposals to reduce the oil major's gearing are also likely, he said.

For the fourth quarter, he had penciled in a 2% year-on-year rise in production, but sequentially production was expected to grow by 7% due to seasonality and following the purchase during the period of the BHP L48 assets.

For Ocado, Numis's Andrew Wade is expecting the company to report full-year operating profits on an EBITDA basis of £72.0m, versus a consensus forecast for £75.7m.

That would be roughly 15% less than the prior year figure of £84.4m.

The online grocer's results would come amid the continued ramp-up of its customer fullfilment centres at Andover and Erith over the final three months of the year and, encouragingly, according to Wade, double-digit growth in the company's rate of customer acquisitions in the fourth quarter.

Wade said he is looking for further details on the company's ramp-up at Erith, Ocado's fourth CFC, and progress on its Solutions development.

Nevertheless, he expected the market spotlight to be on the impact that IFRS 15 would have on the online grocer's financials.

The new accounting norm would not impact on Ocado's cashflows or on the net-present-value of its deals, but it would result in the revenue from long-term contracts being spread-out over the lifetime of the same while associated costs would be treated as incurred.

For fiscal year 2019, the hit to the firm's EBITDA would be approximately £40m.

"Aside from the accounting, we remain positive on Ocado, confident that its market-leading end-to-end grocery distribution solution supports a long term earnings growth opportunity, both from future deals and within those already signed."

Tuesday February 05


Mattioli Woods


Johnson Matthey


Balance of Trade (US) (13:30)

ISM Non-Manufacturing (US) (15:00)

PMI Composite (EU) (09:00)

PMI Composite (GER) (08:30)

PMI Composite (US) (14:45)

PMI Services (EU) (09:00)

PMI Services (GER) (08:55)

PMI Services (US) (14:45)

Retail Sales (EU) (10:00)


Amino Technologies, BP, Ocado Group, RM, St. Modwen Properties


Dewhurst, Hargreave Hale AIM VCT , JPMorgan Asian Investment Trust, Numis Corporation, Ten Lifestyle Group


Greencore Group