What to expect from companies announcing results week commencing 14 January 2019.
Companies reporting w/c 14 January
The Share Centre gives its thoughts on what to expect from companies announcing results week commencing 14 January 2019.
Boohoo (Q3 2019 Sales and Revenue Release)
The profit warning from online clothing retailer Asos in December came as a surprise to many and focused the market’s attention on a part of the retail sector that many investors assumed was still performing well. Its peer Boohoo saw its shares caught up in the sector-wide drop which followed. However the company which has grown sales and profits steadily over the past four years, reassured the market by putting out a brief statement stating its trading had remained strong with record sales in the Black Friday period and overall trading "comfortably in line with market expectations". This update covers the third quarter and investors will be looking closely at sales and any signs of discounting.
We currently list Boohoo as a BUY
Persimmon (Q4 2018 Sales and Revenue Release)
The media focus will now shift to the group's performance rather than its previous CEO's pay packet. The shares have been lifted at the start of 2019 as peer Taylor Wimpey reported a relatively positive update for the year ending 2018 while the outlook for 2019 remained resilient despite the political and macro-economic backdrop. Investors will hope that Persimmon will report similar numbers but they will also be on the lookout for comments on the potential impact of Brexit and whether the costs of labour and materials are heading higher.
We currently list Persimmon as a HOLD
Tullow Oil (Q4 2018 Sales and Revenue Release)
In this trading update the firm should give an indication that 2018 will have been their best in terms of revenues since the collapse in the price of oil in 2014 as oil prices slowly recover. Investors will hope that there weren't any operational issues in the final period of 2018 and that production will come in at between 89,300 and 93,300 barrel of oil equivalent. They will expect an update on the new exploration projects in Africa and South America.
We currently list Tullow Oil as a BUY
Associated British Foods (Q1 2019 Earnings Release)
While the market will naturally take an interest in any comments on the troubled sugar business, the main focus for investors in this update will be the performance of Primark. That is mainly due to concerns about the strength of retail sector at present, as demonstrated by Next’s recent 9.2% drop in high street sales in the run up to Christmas, and the fact that in December ABF said trading at Primark had been challenging. Investors will be interested to hear if ABF still expects an increase in Primark's profit this year and whether overall earnings are expected to remain flat despite another expected fall in sugar prices.
We currently list Associated British Foods as a HOLD
Whitbread (Q3 2019 Earnings Release)
This third quarter trading update will be mostly of interest for comments on the performance of low-cost hotel chain Premier Inn, both in the UK and in key overseas markets such as Germany. Investors will look specifically at room occupancy levels and whether there has been any significant change to the expansion plans outlined at the interim results in October. The past year for Whitbread has of course been dominated by the sale of the Costa Coffee chain for £3.9bn to Coca Cola and the company recently confirmed that most of the proceeds will go into the share buyback scheme due to start after this update. Details of how the rest will be used are due to be announced on 13 February.
We currently list Whitbread as a HOLD
Other companies reporting this day include: The Sage Group (Q1 2019 Sales and Revenue Release) - HOLD
Rio Tinto (Q4 2018 Sales and Revenue Release)
Investors will be hoping for an update on the company’s outlook for the year ahead, along with any further news on planned expansion projects, allied to capital expenditure. The group’s focus remains on extracting iron ore so this will be an area to concentrate on. Cost control has been increasingly important for large mining groups enabling them to return increasing amounts of cash to shareholders. Last time the group reported an increase in iron ore, bauxite and copper production.
We currently list Rio Tinto as a BUY
Announcements for the w/c 14 January 2019:
16 Jan 2019, UK Consumer Price Index
The previous month's rate of price increases moderated to 2.3% as the cost of transport, food, beverages and leisure slowed down. For December there are some expectations that it could head a little lower still as the fall in oil prices since the summer highs feed through to the pumps.
18 Jan 2019, UK Retail Sales for December
This set of retail sales figures is a crucial indicator of the health of the UK consumer and the wellbeing of the high street. The November figures showed a bounce on the previous month, chiefly as a result of a strong Black Friday sales period. However, this could turn out to be to the detriment of December trading as a number of consumers could have brought their seasonal shopping forward into November. The trading updates we have had from our major retailers have given a mixed picture for Christmas, with online still gaining over the high street while food and groceries show a better picture than for general merchandise.
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