There will be a flood of blue-chip results over the coming week, providing a real hotchpotch of the good, the bad, and the ugly among the FTSE 100 constituents.
Among the highlights should be a trading update from Primark owner, Associated British Foods plc’s (LON:ABF), full-year numbers engine maker Rolls Royce Holdings PLC (LON:RR.), as well from broadcaster ITV plc (ITV) and advertising giant WPP PLC (LON:WPP).
Away from the corporate whirl, US fourth-quarter GDP numbers will be the main macro focus, with a dip in growth from the world’s biggest economy.
Primark sales eyed in AB Foods’ half-year update
Despite the continued tough going for Britain’s retailers, Primark – AB Food’s star division – is expected to post another rise in overall sales in Monday’s second-quarter trading update.
Growth should be driven by new store openings, with like-for-like sales expected to decline. Investors would love to see like-for-like sales return to positive territory, but that is likely to be wishful thinking.
The outlook for more cost savings is more positive, and if recent successes with new fashion lines continue, that should help margins too.
Away from its retail division, investors will be looking for any comments on sugar prices. Profits in that said of the business have plunged in recent years, but there have been signs of late that prices are starting to pick back up.
Overall, analysts at UBS expect to see a 1.1% rise in AB Foods’ group sales, with an underlying margin of 8.5%.
Rolls-Royce eyed for efficiencies following restructuring
Investors will be looking for Rolls Royce to deliver some costs savings in its full-year results on Thursday after some structural changes that have included plans to axe 5,000 jobs.
In a preview, analysts at The Share Centre said investors would be looking for signs of “some of the efficiencies beginning to benefit costs” and if plans to make the company’s three core businesses, Civil Aerospace, Defence and Power Systems, operate more independently had started to show.
“As a sign of the times, investors and media will [also] pay close attention to the impact of Brexit on this flagship industrial and manufacturing group especially given the sad news out of the motor manufacturing industry”.
ITV to report finals in shadow of uncertainty
Shareholders in ITV may be approaching the broadcaster’s full-year results on Tuesday with some trepidation after expectations of a softer fourth quarter in its update in November.
The cautious atmosphere hasn’t been helped by chief executive Carolyn McCall’s comments that an “uncertain economic environment” was knocking the company’s national advertising revenue.
Analysts at The Share Centre said that the group’s “thoughts and plans for the year ahead will be important” given the “ever-changing media landscape”, adding that the shares had hit a 5-year low in December and not followed the market higher so far this year.
However, there may be a silver lining in the company’s digital and content production arms, which McCall is pushing to compete with streaming giants like Netflix while also reducing the firm’s reliance on TV advertising revenue.
Strategy still the key for WPP
Investors in WPP may be getting used to Sorrell-less result days, nevertheless, attention will be closely on the progress being made on the strategy set out by new boss Mark Read when the advertising giant reports full-year results on Friday.
The FTSE 100-listed firm updated the market in December on its plans to spend £300mln over the next three years with the funds going on technology and talent.
The company - which saw founder and chief executive Martin Sorrell leave amid allegations of personal misconduct in April - said it would save £275mln by the end of 2021 by reducing the number of agencies it runs.
"The restructuring of our business will enable increased investment in creativity, technology and talent, enhancing our capabilities in the categories with the greatest potential for future growth,” Read said then.
Not a huge amount of time has passed since the December update and, naturally for a results statement, the group’s finances will also be on the agenda.
Some comfort may be had in the fact that ad firm has promised to prioritise dividends over share buybacks and acquisitions – It expects to declare a final dividend of 37.3p, taking the total pay-out to 60p, unchanged from the preceding year.
Spending news eyed from IAG after Norwegian exit
Analysts at The Share Centre said that since the FTSE 100 group backed away from making an offer for Norwegian Air Shuttle in January, while also saying it intended to sell its 3.93% stake in the firm, questions have been raised around what the company would do with the funds instead.
They added that following a “fairly reassuring” trading update in October, when IAG said full-year profits were expected to rise by some €200mln, the market would be watching to see if it hit its forecasts as well as its expectations for fuel costs in the coming year.
Standard Chartered wraps up recent flurry of big bank results
Following the poor results from HSBC Holdings PLC (LON:HSBA), Standard Chartered PLC (LON:STAN) investors will likely be holding their breath ahead of the emerging markets-focused bank’s full-year results on Tuesday – especially after news this week of a £900mln fourth-quarter charge for expected investigation penalties.
Other banks saw performance drop off in the final months of 2018, and analysts think there is “every chance” that Standard Chartered will also have found the going tough in the fourth quarter.
“We expect fourth quarter adjusted pre-tax profit of US$597mln, down from US$1,069mln quarter-on-quarter, driven primarily from the fourth quarter inclusion of the US$310mln UK bank levy,” analysts at UBS said in a note to clients.
A new three-year strategy plan is set to be announced alongside the numbers which is what most shareholders, and indeed the sector, will be paying attention to.
Standard Chartered management’s outlook for emerging markets for the year ahead will also be worth noting.
BAT expected to puff higher after results
UBS reckons the world’s second-biggest cigarette maker should see “some share gains” given a better performance in some of its key markets and from its strategic brands.
Analysts at the Swiss bank think cigarette volumes will decline 2.1% year-on-year, versus management guidance of a 3.5% drop.
BAT has been investing heavily into its next-generation products (NGPs), and sales of its glo tobacco heating product is expected to hit 3.5bn in the second half.
“We believe organic EBIT growth will be lIMIted by investment related to launches of NGPs as well as adverse FX impact (UBSe £817mln). Our adjusted earnings per share of 292.4p is in line with consensus,” the UBS analysts said in a preview.
Housebuilders could see Brexit, Help to Buy hangovers
A trio of housebuilders will issue full-year results during the week, with blue-chip Persimmon PLC (LON:PSN), Taylor Wimpey PLC (LON:TW.), and Bovis Homes PLC (LON:BVS) due to report on Tuesday, Wednesday and Thursday respectively.
Government schemes like help-to-buy and easier mortgage access have meant housebuilders have been able to boost revenues in recent years.
However, these external conditions are changing, with Help to Buy is set to be scaled back and to come to an end in 2023, and house price growth is slowing on the back of Brexit uncertainties, so investors will be keener to hear what the outlook statements offer than the historic numbers.
Taylor Wimpey is committed to maintaining margins, which should help the group hold steady if the housing market faces a downturn.
Other than that, the firm is aIMIng to return a total of £600mln to shareholders in 2019, an aim that analysts do not expect to change.
Slowing housing market to impact Rightmove
The FTSE 100-listed firm’s subscription-based model means fewer housing transactions and lower property prices don’t have a direct impact on revenues.
But analysts think the group won’t completely escape a downturn with a struggling housing market bad news for Rightmove’s customers - estate agents.
Rightmove listings site is vital for the industry, but with the vast majority of the UK’s estate agents already signed up, revenue growth relies on price hikes.
The question is how much Rightmove can squeeze before the pips start to squeak, and with several large estate agents cutting their office numbers the squeaking is getting louder.
Comparatives tough for Rio Tinto
Modest commodity price rises and improved production should help the top line while it doesn't seem to have suffered to the same extent as some of its peers with production issues at certain operations and cost should, therefore, be kept in check.
Investors will be keen on the group's outlook for which they are confident for the long term, but US-China trade disputes could sour the more medium-term outlook.
However, Rio is likely to see supportive prices in the short term for iron ore following the tailing dam accident in Brazil.
Europe still a destination for the London Stock Exchange
Brexit may not be too far away from marketplace chit-chat and the deadline looms, nonetheless, the company literally at the heart of the City’s securities market has been doing business in Brussels.
The London Stock Exchange Group Plc (LON:LSE), which also owns Borsa Italia as well as the eponymous London stock trading business, last month took a 4.92% stake in Belgium-based clearing house Euroclear for €278.5mln.
The exchange said then that the investment in Euroclear will strengthen their existing relationship and provide “further opportunities for the companies deliver benefits to their customers through commercial collaboration and product development”.
In terms of business performance, analysts at RBC Capital recently flagged that the LCH clearing services and the FTSE Russell information services units were seeing particularly strong growth, something the City will be looking out for in Friday’s full-year results.
As for information services, analysts expect a “considerable deceleration” in top-line growth, from double-digit to high single-digit.
Analysts at UBS forecast the LSE’s second half gross revenue coming in at £1.06bn, while they see gross profit at £951mln, and adjusted underlying earnings (EBITDA) will amount to £523mln.
Switch to online betting from high street hitting William Hill
Bookmakers may be among the few businesses that still call the British high street home, nevertheless, even their time may be expiring.
The traditional betting shop has to adapt if it is to survive. As with shopping, gambling is becoming increasingly popular online, while regulatory changes, such as new lIMIts on fixed odds betting terminals, have also dented betting shops’ profits.
Without giving any exact figures, the group said profits in the retail division fell year-on-year, “challenged by wider high street conditions”.
The FTSE 250-listed firm said its online business produced a “good underlying performance”, although new customer checks aimed at protecting problem gamblers weighed on profitability.
Overall, in the January trading update, William Hill said its 2018 adjusted operating plunged to £234mln in 2018, down from £291mln a year earlier, a figure expected to be confirmed in Friday’s full-year results.
US GDP to show big Q4 dip
On the macro front, US fourth-quarter GDP numbers, due on Thursday, are still expected to show the world’s largest economy is still leading the rest of the world in driving economic growth at around 3% year-on-year.
However, the quarter on quarter GDP number is expected to show a significant dip, to 2.6%, albeit still an impressive rate.
The slowdown has already been reflected by the stock market sell-off towards the end of last year and will partly reflect the trade dispute with China, but the US government shutdown will no doubt have knocked more than basis points of growth.
Significant announcements expected for week ending March 1:
Monday February 25:
Finals: Hammerson PLC (LON:HMSO), Bunzl PLC (LON:BNZL), Ascential PLC (LON:ASCL), Hiscox PLC (LON:HSX), Centamin PLC (LON:CRY), Kosmos Energy PLC (LON:KOS), RTC Group PLC (LON:RTC), Quartix PLC (LON:QTX), Bank of Ireland PLC (LON:BKIR)
Economic data: BBA UK mortgage lending figures; CBI quarterly service sector survey
Tuesday February 26:
Finals: Standard Chartered PLC (LON:STAN), Persimmon PLC (LON:PSN), Meggitt PLC (LON:MGGT), Croda International PLC (LON:CRDA), Travis Perkins PLC (LON:TPK), Derwent London PLC (LON:DLN), Drax Group PLC (LON:DRX), Morgan Advanced Materials plc (LON:MGAM), Augean PLC (LON:AUG), Lighthouse Group PLC (LON:LGT), Synectics PLC (LON:SNX)
Interims: Town Centre Securities PLC (LON:TOWN), Green REIT PLC (LON:GEN)
Economic data: US housing starts; US house price index; US consumer confidence
Wednesday February 27:
Finals: ITV plc (LON:ITV), Taylor Wimpey PLC (LON:TW.), Rio Tinto PLC (LON:RIO), St James’s Place PLC (LON:STJ), Weir PLC (LON:WEIR), Provident Financial PLC (LON:PFG), Metro Bank PLC (LON:MTRO), Capital & Counties PLC (LON:CAPC), Nichols plc (LON:NICL), Tarsus Group PLC (LON:TRS), FBD Holdings PLC (LON:FBH), Unite Group PLC (LON:UTG)
Economic data: US factory orders; US pending homes sales
Thursday February 28:
Finals: International Consolidated Airlines Group PLC (LON:IAG), Rolls-Royce PLC (LON:RR.), British American Tobacco plc (LON:BATS), Bovis Homes PLC (LON:BVS), RSA Insurance PLC (LON:RSA), Rentokil Initial PLC (LON:RTO), CRH PLC (LON:CRH), Merlin Entertainments PLC (LON:MERL), Inchcape PLC (LON:INCH), Aston Martin Lagonda Holdings PLC (LON:AML), Hunting Plc (LON:HTG), Hastings Group PLC (LON:HSTG), Howden Joinery Group PLC (LON:HWDN), Mondi Plc (LON:MNDI), National Express Group PLC (LON:NEX), Petrofac PLC (LON:PFC), Foxtons PLC (LON:FOXT), Gocompare.com Group PLC (LON:GOCO), Vesuvius Plc (LON:VSVS), Amigo Holdings PLC (LON:AMGO), Bakkavor PLC (LON:BAKK), Grafton Group PLC (LON:GFTU), Greencoat UK Wind PLC (LON:UKW), Arrow Global Group PLC (LON:ARW), Diversified Oil & Gas PLC (LON:DGOC)
Economic data: UK Nationwide house prices; US weekly jobless claims; US preliminary GDP; US Chicago PMI
Friday March 1:
Finals: WPP PLC (LON:WPP), William Hill plc (LON:WMH), London Stock Exchange PLC (LON:LSE), Rightmove PLC (LON:RMV), Jupiter Fund Management PLC (LON:JUP), Robert Walters PLC (LON:RWA), IMI PLC (LON:IMI), Essentra PLC (LON:ESNT), Man Group PLC (LON:EMG)
Economic data: UK manufacturing PMI; US manufacturing PMI; US ISM manufacturing; US personal income, consumption