What to expect from companies announcing results week commencing 15 October 2018.
Companies reporting w/c 15 October
Graham Spooner, Investment Research Analyst at The Share Centre, gives his thoughts on what to expect from companies announcing results week commencing 15 October 2018.
Schroders (Q3 update)
The group has been in the news recently as a result of a wealth management joint venture with Lloyds. The share price has been under pressure year to date as a result of pressure on assets under management and some markets. The CEO also highlighted challenges that are facing the industry. Investors will be keen to hear an update on the groups outlook for markets and the inflow or otherwise of funds.
We currently list Schroders as a HOLD
Other companies reporting this day include: Rio Tinto (Q3 sales and revenue release) - BUY
BHP Billiton (Q1 2019 sales and revenue release)
Global trade tensions have increased the downside risk for trade flows and commodity prices, some of which have already fallen back such as copper. However, BHP Billiton's reported full year 2018 results demonstrated the hard work of the last few years made in restructuring and streamlining the business. The group's underlying profits jumped 33% from the previous year to $8.9bn, with impressive improvements in operating margins and the free cash flow which came in at $12.5bn. There has also been a general increase in market prices for most of the commodities it mines
We currently list BHP Billiton as a BUY
Segro (Trading update)
The shares have outperformed the market and many other commercial property groups so far this year, probably because of its exposure to online retailing through its warehouses. This third quarter update follows interim results in July which showed a 21% rise in pre-tax profit and an 8.5% increase in the EPRA net asset value per share. The market will be focused on the retention rate and any comments on the level of demand for its properties. The company has a significant pipeline of new property to develop so any update on that, and the amount of capital needed to complete it will be of interest.
We currently list Segro as a HOLD
Pearson (Trading update)
There is always some nervousness surrounding updates from Pearson. The group has been restructuring with many cost saving measures, which included cutting workforce numbers and asset sales. The group are geared to the education market in the US, where student numbers have fluctuated and sales of educational material have fallen. Sales are generally weighted to the second half so this third quarter update will be viewed as important for the group to try and restore market confidence in it.
We currently list Pearson as a HOLD
Barratt Developments (Q1 sales and revenue release)
The housebuilding sector has come under renewed focus; especially those exposed to the London market, but the likes of Barratt have so far avoided these strains. We should continue to see a strong order book with rising numbers of homes sold at higher prices. However, management’s tone in recent trading updates has been cautious and there is nothing to suggest that this will change. This will be reflected in the land and plot acquisition strategy while the cost pressures of rising material and labour prices is likely to also become more prominent.
We currently list Barratt Developments as a HOLD
Rentokil (Trading update)
With the focus now on its famous pest control business, investors will be hoping that the CEO remains pleased with the performance, as he was at the interim stage. Performance in Asia and the Americas will be important, along with attempts to increase its emerging market presence. Improved recent trading has been boosted by acquisitions, despite severe weather conditions disrupting some of its operations.
We currently list Rentokil as a HOLD
Other companies reporting this day include: Unilever (Q3 sales and revenue release) – BUY
InterContinental Hotels Group (Q3 sales and revenue release)
Interim figures in August were reassuring as they showed strength across all of the company’s main markets. The management also gave an upbeat outlook statement at the time so investors will be interested to see if the third quarter continued in this vein. Along with all the usual key measures, such as revenue per room, any changes to the number of rooms available will be watched closely. China has been a good growth market in recent times so its performance will be a focus for many. Any news on the rolling out of the two new brands launched in the first half will also be of interest. Hints on the level of full-year profits and dividends will be noted also.
We currently list InterContinental Hotels Group as a HOLD
Other companies reporting today include: London Stock Exchange (trading update) - HOLD
Announcements for the w/c 15 October 2018:
16 October 2018, UK unemployment data for August/September
The UK’s unemployment rate is likely to hold at 4%, a low figure by historical standards but the issues of the slow rate of wage growth somewhat abated in recent months as it picked up, but for September the weekly wages including bonuses is expected to fall back to 2.4% raising the debate once again.
17 October 2018, UK September inflation data
If the wage growth comes in as expected and last month’s inflation rate of 2.7% holds up then we will be back in the territory of falling real wages. For August it was the cost of transportation and food & leisure making the biggest contribution to the surprise rise and again It is highly likely that we could see more of an impact of rising oil prices as well as higher food prices due to the exceptionally hot weather hitting the yields of certain crops.
18 October 2018, UK September retail sales
The summer months have been reasonably good for the retailer sector given the warm weather, the football world cup and a period of rising real incomes. However, with the weather returning to normality during September the focus may return to the challenging environment that retailers are under. It shouldn’t be any surprise to see more of the sales moving from the high street to online.
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