We give our thoughts on what to expect from companies announcing results week commencing 24 February 2020.
Companies reporting w/c 24 February
Associated British Foods Plc (Q2 2020 Earnings Release)
There shouldn’t be too many surprises on recent trading in this first half update given that it is only a few weeks since the last statement. The focus for most in the market will once again be very much on value retail chain Primark with its UK performance and overseas expansion plans. Sales in European markets such as France and Italy have been strong recently although Germany is seen by many investors as the main opportunity for growth. Profit margins have fallen back slightly but prospects for the sugar business, which is expected to see a decent rise in profits this year, will also be of interest to investors
We currently list ABF as a HOLD
Bunzl Plc (Q4 2010 Earnings Release)
The share price has underperformed the market over the last year as a result of an update last April which pointed to slowing growth. The CEO reiterated in December slowing macroeconomic and market conditions in areas that it operates in. The group has relied upon making acquisitions to boost revenue and has a global presence in a variety of every day products ranging from disposable cups to napkins and safety equipment.
We currently list Bunzl as a BUY
Other companies reporting this day include Finsbury Food Group Plc (Q2 2020 Earnings Release) - BUY
Rio Tinto Plc (Q4 2019 Earnings Release)
We have already had the production updates from Rio for the full year of 2019 showing various issues hitting overall production. Copper production was down due to falling ore grades, technical issues affected aluminium production and severe weather in Australia hampered iron ore production. During 2019 iron ore prices were on average higher than in 2018 so this will have a positive contribution, however the restarting of production by Vale and the lingering effects of the Covid-19 are expected to result in falling iron ore and other commodity prices during 2020.
We currently list Rio Tinto as a BUY
Other companies reporting this day include Taylor Wimpey Plc (Q4 2019 Earnings Release) – HOLD
EVRAZ Plc (Q4 2019 Earnings Release)
The company’s share price recently hit a 10-year low following on from the latest profit warning in January along with the resignation of the finance director. Cost cutting has been obscuring the ongoing slowdown in US higher education which continues to impact. This in turn has again raised doubts over management, its strategy and hopes for the next financial year. Management is expected to come out with a new plan with the results.
We currently list EVRAZ as a SELL
Hikma Pharmaceuticals Plc (Q4 2019 Earnings Release)
The first half 2019 results followed on from the recovery seen in 2018 helped by a number of product launches for the generics drugs producer. It has seen better underlying economic conditions in the Middle East while the US, now its largest regional exposure, is still performing well. However the final months of the year may have seen increased competition in its markets as Pfizer restarted production of its opioid painkillers. Investors will expect an update on the R&D portfolio including the generic version of Advair.
We currently list Hikma as a BUY
Persimmon Plc (Q4 2019 Earnings Release)
In common with many of its peers, Persimmon’s shares have had a stellar run over the past six months, rising almost 80% in that time. That comes despite an independent report published in December which was extremely critical of Persimmon and highlighted some severe failings in its building standards. The new CEO Dave Jenkinson is now trying to address those and the actions he is taking are expected to result in a drop in revenue in these full year figures for 2019. Investors will be keen to see what further steps Jenkinson is planning for 2020 in terms of its new customer care initiatives and what implications those may have for profits and dividends.
We currently list Persimmon as a HOLD
Flutter Entertainment Plc (Q4 2019 Earnings Release)
Flutter, formerly Paddy Power Betfair, has seen the common trend of declining revenue from its high street shops offset by growth in online gambling and gaming. The last trading update in November raised guidance for the company’s US operations but that was quickly overshadowed by the news of its blockbuster takeover of Canadian gambling group Stars, which owns the PokerStars brand. Given its sheer scale that was always likely to attract the attention of competition authorities in several countries and sure enough the UK’s CMA has recently announced a review of the deal. Beyond that any comments on prospects in the US will also be very much of interest given the trend towards deregulation of sports betting there.
We currently list Flutter Entertainment as a HOLD
Reckitt Benckiser Group Plc (Q4 2019 Earnings Release)
2019 has been a fairly poor year for the group as it produced a series of numbers to reduce investors’ expectations for the full year. At the nine month stage revenues only grew by 1.6% and the final three months are not expected to change the overall growth rate much, there is not much hope for profits either as management guided a modest decline in margins. The slower global economy and increased exposure to China will almost certainly impact upon the first couple of months of the year but investors would hope that certain acquired businesses have got to grips with underlying issues such as at Mead Johnson.
We currently list Reckitt Benckiser as a HOLD
Standard Chartered Plc (Q4 2019 Earnings Release)
The emerging market focussed bank is midway through a strategic plan aimed at hitting a return on equity of over 10%, further cost cutting, scaling back on some retail banking in order to focus on wealth and digital banking. 2019 was a difficult year for banks and despite beating forecasts in October management remains cautious on the outlook. Any comment on the recent effects of the coronavirus will be worth noting, along with their outlook for emerging markets.
We currently list Standard Chartered as a HOLD
Other companies reporting this day include:
James Fisher & Sons Plc (Q4 2019 Earnings Release) – BUY
Genus Plc (Q2 2020 Earnings Release) – BUY
Mondi Plc (Q4 2019 Earnings Release) – BUY
PPHE Hotel Group Ltd (Q4 2019 Earnings Release) – BUY
RSA Insurance Group Plc (Q4 2019 Earnings Release) – HOLD
Rentokil Initial Plc (Q4 2019 Earnings Release) – HOLD
St James’s Place Plc (Q4 2019 Earnings Release) – BUY
Vesuvius Plc (Q4 2019 Earnings Release) – BUY
WPP Plc (Q4 2019 Earnings Release) – HOLD
British American Tobacco Plc (Q4 2019 Earnings Release) - HOLD
International Consolidated Airlines Group (Q4 2019 Earnings Release)
Interesting times for the airline sector with concerns about the impact of the coronavirus outbreak and the recent collapse of Air Italy. Environmental issues such as carbon emissions are also having an effect, which may well increase as the year goes on. IAG has also been hit by industrial action and higher fuel costs in recent months, so investors will be hoping for better news from the final quarter of the year. In the middle of all this the CEO Willie Walsh has announced he is stepping down in June and Qatar has increased its stake to 25%. With so much uncertainty any comments on prospects for the new financial year will be of interest.
We currently list International Consolidated Airlines Group as a BUY
Rolls-Royce Holdings Plc (Q4 2019 Earnings Release)
Rolls Royce have faced a tough year or so with flaws in its Trent 1000 engine causing disruptions in the group’s supply chains and the deterioration of some of its end markets. Considerations by Airbus to cut down production on the A330 alongside the possible cuts by Boeing for the 787’s also are a concern for engine production looking forward. Coronavirus impact is also not helping with the air traffic impacts hurting capacity further. All in all, there are a lot of updates that investors will anticipate progress on. If difficulties show no signs of improving, the outlook remains relatively bleak for the group. Although the valuation has come back in line with its longer term average it is clear there are still a number of risks associated with this British icon.
We currently list Rolls-Royce as a HOLD
CRH Plc (Q4 2019 Earnings Release)
The building materials group has been aiming to improve margins and cash generation. Management have been expecting solid market fundamentals to continue across its key markets. Hopes for increased US Federal and State spending on infrastructure projects, which as they are geared to North America should be a positive. Other areas for investors to focus on will be costs, the performance of acquisitions and the outlook for the year ahead.
We currently list CRH as a BUY
Other companies reporting this day include:
London Stock Exchange Group (Q4 2019 Earnings Release) – HOLD
Rightmove Plc (Q4 2019 Earnings Release) – HOLD
All information given including prices, yields and our opinion is correct at the time of publication. Our opinions on investments can change at any time and for our latest view please go to www.share.com. To understand how our Investment research team arrive at their views please read our Investment Research Policy.