Graham Spooner gives his thoughts on what to expect from companies announcing results week commencing 12 March 2018.
Graham Spooner, Investment Research Analyst at The Share Centre, gives his thoughts on what to expect from companies announcing results week commencing 12 March 2018.
Clarkson (Q4 Preliminary results)
The company is a market leader in providing integrated shipping services and geared to economic conditions and global growth. The group stated in January that results are expected to be in line with expectations. Of more interest to investors will be its outlook for its services in the year ahead, particularly as management have been hinting at continued signs of improvement for the shipping industry. Other areas to concentrate on will be the effects of recent currency movements and the cybersecurity breach last November.
We currently list Clarkson as a BUY
Antofagasta (Q4 results)
Commodity stocks have had an exceptional 2017 as miners clean up their balance sheets and reduce costs, and Antofagasta should be no different. With overall production improvements and higher average commodity prices, investors should expect strong sales growth compared to the previous year and a significant improvement in overall profitability. Key to the future will be whether the new mines and assets offset the declining grades of ore at some older mines.
We currently list Antofagasta as a HOLD
Wm Morrison (Final results)
The supermarket group pleased the market with a better than expected Christmas trading update in January. Like for like sales rose 2.8% but there is some evidence that Morrisons has been cutting its prices more than its rivals, raising questions over whether this may have damaged its profitability. Competition in the sector is unrelenting with US giant Amazon’s grocery delivery service now added to Aldi and Lidl as a challenge to the incumbents.
We currently list Wm Morrison as a HOLD
Hikma Pharmaceuticals (Final results)
The business has faced a very difficult year as some of its own generic drugs face competition in the US. It has also faced delays with the regulatory approval of generic version of GSK’s asthma products. Resulting profit warnings sent the shares to multiyear lows. However the hope is that 2018 will bring better news for regulatory approval for this drug and many others and that the currency volatility of North African countries isn’t repeated. Moreover, there are also hopes that the acquisition of troubled West Ward Columbus has seen issues being resolved.
We currently list Hikma Pharmaceuticals as a BUY
Prudential (Q4 results)
The group’s tilt towards the fast growing Asian markets over the years has been an excellent strategy and we should see this reflect through to the full year results. Its US and UK operations have also performed well and with stock markets during 2017 rising; fees from the asset management business should also be good. The merger of the life and UK asset management business should, in theory, deliver material cost savings so we will expect an update on this. Investors will also hope to see good balance sheet and solvency numbers.
We currently list Prudential as a BUY
Old Mutual (Q4 results)
There has been increased interest over companies with exposure to South Africa as a result of political changes, leading to a strong share price performance over the past three months. Investors will be keen to hear an update on proposals to split the group into four independent businesses this year. Any comment regarding its outlook for South Africa will also be worth noting.
We currently list Old Mutual as a HOLD
Berkeley (Q3 trading update)
Half year results from this mostly South-East region housebuilder in December showed a 10% rise in homes delivered and a 36% jump in pre-tax profits. The market will be interested in any comments about the strength of the housing market in this update, especially in London. The company has previously pointed to an increased risk to earnings as the uncertainty from changes to stamp duty and mortgage interest deductibility, as a result of Brexit, were materially impacting the London housing market. New construction start levels will also be a key indicator and any comments on reports that the government is going to loosen the planning laws will be of interest.
We currently list Berkeley as a HOLD
Economic Diary: week commencing 12 March 2018
13 March, US Consumer Price Index, February – U.S. Bureau of Labor Statistics
It’s a busy week for news on inflation. Last month revealed news that US consumer prices rose by 0.5% in January on the month before, although at 2.1%, the year on year inflation rate was not especially high. However, with US core inflation – minus food and energy – also up in January, there are concerns that US inflation is on an upwards trajectory, with implications for US interest rates.
16 March, EU inflation, February – Eurostat
While US Inflation has been showing worrying signs of creeping up, in the EU things look quite different. According to the flash estimate of inflation in the EU in February, the annual inflation rate was 1.2%, the lowest level in over a year, whilst core inflation was at just 1%. Right now, there is very little, if any, pressure on policy makers at the European Central Bank to increase interest rates.
Further announcements include:
|16 March||The Financial Policy Committee statement from its meeting on 12 March 2018 – Bank of England.|
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