What to expect from companies announcing results week commencing 16 July.
Companies reporting w/c 16 July
Helal Miah, Investment Research Analyst at The Share Centre, gives his thoughts on what to expect from companies announcing results week commencing 16 July 2018.
Monday & Tuesday
Companies reporting on Monday include: Rio Tinto (Q2 earnings) which we currently list as a BUY
Tuesday; Royal Mail (Q1 sales and revenue release)
Since promotion back into the FTSE 100 the shares have become uninspiring again which were not helped by the full year set of results. For the first quarter we don’t suspect that too much will have changed including the pressure faced from the structural declines in the letters market while package deliveries are still facing tough competition, despite the support from ever increasing demands from online orders. However we can expect that its European package delivery business GLS may show strong growth.
We currently list Royal Mail as a HOLD
Companies also reporting on Tuesday include: BHP Billiton (Q4 earnings) - BUY
easyJet (Q3 sales and revenue release)
Interim results in May were excellent but the company has been hit by industrial action in France and Italy since then. Investors will be looking to see if full year profits are still expected to be in the £530m-£580m range. The key revenue per seat figure will also be watched as that is forecast to rise, and any comments on fuel costs will be noted given the rise in the oil price so far this year.
We currently list easyJet as a BUY
RPC Group (Q1 sales and revenue release)
It’s been a tough year so far for packaging group RPC. The shares have been hit by concerns about plastic waste and government action to try to reduce it. In June some investors focused on a fall in the cash conversion rate published in the final results, although revenues and adjusted pre-tax profits both rose 36%. Most recently there have been reports that the accounting regulator has asked for clarity on some figures in the annual report. The market will be looking for something more positive from the company in the Q1 update.
We currently list RPC Group as a BUY
Companies also reporting today include: Severn Trent (Q1 earnings) - HOLD
SSE (Q1 sales and revenue release)
The full year results were a little disappointing as investors focussed on government price caps and customer switching to cheaper alternatives. For the first quarter these themes will still be there but much milder weather since the end of March will almost certainly result in reduced energy demand. Investors will expect updates on the demerger and merger of various parts of its business with Npower and Innogy.
We currently list SSE as a HOLD
Unilever (Q2 earnings release)
These figures should not contain too many surprises for the market as the company said only a few weeks ago that that sales growth in the first half would be below targets as a result of short-term problems in Brazil. That followed disappointing first quarter numbers and news that pricing in some key emerging markets was weaker than expected. Investors will be focused on whether the company retains its full year guidance of 3-5% sales growth. Despite the weaker sales the shares have performed well, helped by a Eur6bn share buyback which began in May. Some investors will be looking for comments on the proposed Tesco-Carrefour alliance and how it might impact Unilever as a major supplier.
We currently list Unilever as a BUY
Companies also reporting today include: Anglo American (Q2 earnings) - HOLD
Announcements for the w/c 16 July 2018:
17 July: UK Jobs Data for May & June
The latest set of GDP and production data suggested that the UK economy should show a bounce back from the weak Q1 and we should see more of this evidence in the latest set of jobs data. The unemployment should hold around the lowly 4.2% rate while all eyes will still be on the rate of wage growth (which has been around 2.5% over the year) still seems to stick to levels suggesting that the jobs market is not that tight.
18 July: UK Inflation Data for June
Expectations are that we should see a slight pickup in year-on-year prices increase to around 2.6% after a few months of easing pricing pressures as the leisure, culture and restaurants faced softer cost pressures. We should see again that the transportation sector leads in prices rises as oil prices in recent months edged up to $80 a barrel. Should the inflation rate tick upwards, the much touted August rate hike will be further priced in but the level of real income rises will come under scrutiny again if the level of wage growth comes out soft.
19 July: UK Retail Sales
After a relatively poor set of figures from the UK High Street in the first quarter, we saw much improved Retail Sales figures during April and May which was put down partly to pent up demand coming through after the poor weather. There are expectations hope that the hot June weather and the so far successful performance of our football team that has given a big boost to spending on summer clothing ranges, barbeques, beers, and England football paraphernalia. More importantly a good figure would help cement the view that the economy as a whole is experiencing a modest bounce back after the weak first quarter.
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