Graham Spooner gives his thoughts on what to expect from companies announcing results week commencing 16 April 2018.
Companies reporting w/c 16 April
The forward look from The Share Centre for week commencing 16 April 2018
Associated British Foods (Q2 results)
Investors will be focused on the performance at value clothing chain Primark in the UK, but also looking to see if the group still expects profit margins to improve in the second half.
Following a disappointing trading update in January the company had better news for the market in February with like-for-like sales at Primark up 1% in the 16 weeks to 3rd March. Investors will also be interested to hear if the sugar business is still expected to see lower revenue this year, due to lower EU prices.
We currently list Associated British Foods as a HOLD
Companies also reporting today include: Rio Tinto (Q1 production report) - BUY
RELX (Q1 results)
Europe’s largest media company has moved away from trade journals and moved into providing digital professional information services, along with exhibitions. There has been solid like for like growth across all of its divisions and an improvement in margins. Of its divisions, Risk Solutions, which provides information to help prevent and spot fraud, has showed the best growth, along with Exhibitions. Investors will be keen to hear an update on its recent US acquisition of ThreatMetrix and the effects of the recent strength in sterling.
We currently list RELX as a BUY
SEGRO (Q1 results)
Shares in property development group SEGRO, formerly Slough Estates, have performed well since the company joined the FTSE 100 index in June last year. They now trade at a 9% premium to net asset value but that is not as big as many other groups in the sector. A big part of SEGRO’s recent success has been due to the growth of online retailing and subsequent increase in demand for warehousing. Investors will be looking at the level of occupier demand and rental values, with a wary eye on the assets in Continental Europe which have struggled a bit in recent times.
We currently list SEGRO as a HOLD
Companies also reporting today include: BHP Billiton (Q3 production report) - BUY
Unilever (Q1 results)
This update comes only a few weeks after the big announcement that the company would make its legal base in the Netherlands. For the Q1 numbers investors will move their focus back to the current trading position, especially the performance in key emerging markets such as India. In February the company said sales had improved in the final quarter of last year but cautioned that overall trading conditions in its markets remained challenging. The market will also be looking out for any comments on the rumours that the company is considering bidding for the brands, including Horlicks, which GlaxoSmithKline announced it was selling recently.
We currently list Unilever as a BUY
Rentokil Initial (Q1 results)
The market will be focussing on currencies following on from the last update which warned of the negative effects of exchange rate moves. The group made a significant number of acquisitions last year, which has boosted their recovery and its RIGHT WAY plan. Other areas to concentrate on will be performance in Asia and the Americas and the effects of weather conditions.
We currently list Rentokil Initial as a HOLD
Reckitt Benckiser Group (Q1 results)
The market is hoping for higher sales over the first quarter, even though the environment remains difficult. The share price has recently recovered a little after underperforming over the past year. Reckitt’s pulled out of buying Pfizer’s consumer-health business in March and this will now focus attention on the restructuring of its own business into two divisions, consumer health and home and hygiene.
We currently list Reckitt Benckiser Group as a BUY
16th April, US March Retail Sales, US Census Bureau
Retail sales data in the US has tailed off a fair bit, registering a 0.1% month on month fall for the last three months with the automotive sector being the main drag. The consensus view now is that the March figures will show the first increase for several months of +0.35%.
17th April, Chinese Q1 GDP
The world’s second largest economy is still growing at an enviable pace by Western standards, but the quality of the data is still questionable. No doubt the published growth rate will almost certainly be in-line with Chinese government policy maker’s target rate around 6.7%
17th April, UK Jobs Data, UK labour market - Office for National Statistics
The February unemployment rate is expected to tick up a little to 4.4%, still a very low number, but the reduced slack in the labour market could show through to another month of improved wage rises following the previous month’s +2.8%.
18th April, UK Inflation data, Office for National Statistics
As the impact of sterling’s plunge fades in year-on-year comparisons we should see another month where the inflation rate drops back down slowly to near the Bank of England target. In fact the consensus view is that it could drop to 1.9%, below the 2% target.
19th April, UK Retail Sales, Office for National Statistics
The month on month figures have been a little erratic lately but the year on year figures have been a little more stable, within a range of 1.3% to 1.5% over the last four months. Nonetheless, retail sales numbers are still a long way off the pre-Brexit numbers and the question is whether shoppers are still holding off due to the uncertain political and economic environment despite wages showing a modest improvement lately.