What to expect from companies announcing results week commencing 18 March 2019.
Companies reporting w/c 18 March
The Share Centre gives its thoughts on what to expect from companies announcing results week commencing 18 March 2019.
John Wood Group (Q4 2018 Earnings Release)
The pullback in oil prices during the second half of last year dragged down shares of oil companies as would be expected; oil services companies have a geared impact and pulled back just as much. This has left John Wood Group to be relegated at the latest reshuffle. While the first half revenues were strong, the profits were impacted by integration costs associated with AMEC Foster Wheeler, the hope here is that this will not be repeated to the same extent and we begin to see the synergies coming through. They should though reverse the previous year’s losses. Going forward, interest will focus on the order book and whether it has built upon the previous level of $10bn.
We currently list John Wood as a BUY
Ocado (Trading update)
Interesting times for Ocado with the recent agreement with Marks & Spencer to sell 50% of its UK retail business and the major fire at its new Andover warehouse. In this first quarter update investors will be looking out for any news on the impact of the fire on trading and how the company plans to use the substantial amount of cash it will receive from M&S in the near future. Also of interest will be any comments on potential new deals to sell its technology to more retailers around the world.
We currently list Ocado as a HOLD
Companies reporting this day include Antofagasta (Q4 2018 Earnings Release) – HOLD
Kingfisher (Q4 2019 Earnings Release)
Investors will be hoping for some good news from struggling retail group Kingfisher in these full-year figures. Last year saw a dismal tale of falling sales, declining profits and, understandably, an underperforming share price. The focus once again will be on the French operations, especially DIY chain Castorama, for any signs of improvement. The market will expect continued growth at Screwfix and looking for good results from the ongoing unification and efficiency plan. If there is only more bad news the pressure on CEO Veronique Laury will increase further, and there have already been some stories that the board is looking to replace her.
We currently list Kingfisher as a HOLD
Next (Q4 2018 Earnings Release)
The Christmas trading update from high street clothing retailer Next in January was rather mixed, although the shares have performed well since then. The market is expecting profits of £723m but will be focusing on current trading in the high street stores, as they dropped 9% in the two months to December. Cash generation will also be a focus as that has a direct bearing on whether the company will be able to continue its run of special dividends. The company previously said that it expects profits to drop in the current financial year but there is a recent history of forward-looking statements proving to be overly pessimistic. Still, the highly regarded CEO Lord Wolfson is always worth listening to and his comments on preparations for Brexit will be of note.
We currently list Next as a HOLD
Companies reporting this day include Enquest (Q4 2018 Earnings Release) – BUY
Smiths Group (Q2 2019 Earnings Release)
The diversified industrial has recently suffered due to performance issues at its medical division caused by regulatory changes and the loss of contracts. So this division will no doubt be the focus once again especially since management are looking at ways to divest it, possibly with a separate listing. The remaining divisions have done better but the slump in oil prices since the summer will result in the oil services division to report a tougher trading environment or difficulties building on its order book. Meanwhile global security concerns will help the Detection business and Flex-Tek's exposure to the US construction market should bring positive results.
We currently list Smiths Group as a BUY
The week beginning 18 March has a significant number of economic releases for the market to contend with at the same time keeping an eye on the Brexit shenanigans. On Tuesday at 9:30am the latest jobs data are to be published; the unemployment rate is at historic lows and we should have seen more pressure a while ago on wages. However, this is coming through slowly, with the previous month’s weekly rise at 3.4%. Any uptick in the rate of unemployment will no doubt have a Brexit focus. On the 19th we have the latest inflation rate published which previously made the headlines by dropping materially during January, helped along by lower oil prices, but also because the annualised figure dropped below the Bank of England’s target rate. Should inflation hold below 2% again or drop lower, then it makes the Bank of England’s interest rate decision on the 21st of March even easier, not that any rise in interest rates from the current 0.75% was expected anyway. Before the publication of the Bank of England’s decision we have the latest retail sales data for February. January’s figures benefitting from big discounts on clothing after the Christmas period, the view amongst many though remains that the consumer is holding off on big ticket items amidst the political and economic uncertainty and may show up in the retails sales figures.
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