We give our thoughts on what to expect from companies announcing results week commencing 9 November 2020.
Companies reporting w/c 9 November
DCC Plc: Q2 2021 Earnings Release
This conglomerate has seen mixed performance across its portfolio, in particular relating to its energy distribution businesses, which have not fared well in recent months as people have continued to travel less frequently and therefore requiring fewer fill-ups at petrol stations. Its B2B electronics distribution business has also suffered as customers reduced their activity under the lockdowns. That said, we anticipate that the Healthcare and Environmental Services unit should continue to do well. While downside pressures should have abated in the last quarter, the outlook for the fourth quarter is unlikely to be rosy, given renewed lockdowns. DCC is an acquisitive company and investors will want updates on the integration of new businesses while keeping an eye on its steadily rising debt levels.
We currently list DCC as HOLD.
Land Securities Group Plc: Q2 2021 Earnings Release
There is no denying the impact that Covid-19 has had on the Group's office and retail-exposed portfolio, which is represented through the large discount at which shares are currently trading. As a result, the Group announced last month that it would sell off close to a third of its £12.8bn portfolio as it sought to reduce exposure to struggling sectors, with 60% of the reduction focused on London. With the second national lockdown having begun today, it is likely the Group will face further pressure. Investors will be hoping for further clarity on the current situation and outlook in light of the new lockdown.
We currently list Land Securities as HOLD.
Persimmon Plc: Q3 2020 Sales and Revenue Release – Trading Update
The housebuilding sector got a lift recently following an upbeat trading statement from Crest Nicholson, which reported a strong rebound in activity and the return of dividend payments. Persimmon has performed better than many of its peers so far this year, having avoided placing any of its staff on furlough, which has meant the Group was able to restart operations more quickly when lockdown ended. The market will be interested to see whether the suspension of stamp duty, and the recent trend that has seen more city residents to move to the suburbs, is helping Persimmon. Any comments on how the current lockdown may impact the Company and future dividends will also be very much in focus.
We currently list Persimmon as HOLD.
Coca Cola HBC: Trading Update
Soft drinks bottling group Coca-Cola HBC saw a 15% drop in first half revenues due to the impact of the Covid-19 pandemic on demand, especially from restaurants and bars as a result of lockdowns. However, in August the Group reported some encouraging signs of recovery as restrictions were eased in many European countries. With many of those same countries now re-imposing restrictions, the market will be interested to hear what impact the Company feels this will have on its revenues. Investors will also be looking to see how the performance of Costa Coffee and ready-to-drink tea products are impacting performance more broadly.
We currently list Coca Cola as HOLD.
Flutter Entertainment Plc: Q3 2020 Sales and Revenue Release – Trading Update
The outlook for Flutter remains highly uncertain, given the ongoing nature of the pandemic and the possibility of regulatory changes due to an increased level of scrutiny by governments on the industry. Despite this, the shares have shown strong performance since the February drawdown, with an impressive first half that saw adjusted earnings up by 59% following a big rise in online activity. In this upcoming update, investors will be keeping a watchful eye on any further developments in the US, where the Group's growth focus remains. Attention will also be focused on whether customer activity remains at high levels.
We currently list Flutter as HOLD.
Burberry Group Plc: Q2 2021 Earnings Release
At times of economic stress, it is natural to expect luxury goods companies’ share prices to pull back and for this sector, the Covid-19 pandemic also removed one of its key sources on income: travellers and tourists. However, compared to other retailers, Burberry's share price has remained relatively resilient. The Company will have been supported by its continued focus on expanding its online presence, while the chief designer’s new creations are also expected to have been keenly followed by the brand's fans. A weakening dollar should in theory help sales, and investors will be looking out for updates on a partnership with Tencent in China.
We currently list Burberry as HOLD.
National Grid Plc: Q2 2021 Earnings Release
The Group was disappointed with Ofgem’s draft proposal in July regarding the regulatory framework for the next five years, which is set to limit what companies can make with new price controls, while also focusing on an investment plan to deliver on green energy. The initial response to the draft was that it was more negative than expected, though much rests on the publication of the final proposal in December. More broadly, the defensive nature of the sector has helped National Grid limit losses during the Covid-19 crisis, although it has not escaped the impact of the regulator’s announcement, which increased downward pressure on the share price. Investors will be focusing on the US performance and any news of bad debts as a result of Covid-19.
We currently list National Grid as BUY.
B&M European Value: Interim Results
Shares in discount retailer B&M have performed strongly this year, taking the Company into the FTSE 100 index for the first time. The Company kept many of its stores open during the first lockdown period, and has continued to benefit from the fact that many of its stores are out-of-town and offer a wide range of value products. In these interim results, investors will be looking to see if the good trading reported in September has continued, and what expectations the Company has for the new lockdown period, especially in the all-important run up to Christmas. B&M previously said it expected full-year earnings to be £285m, so any update on that will be of interest.
We currently list B&M as HOLD.
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