UBS forecasts a 15% fall in total advertising revenue in the third quarter after August and September saw trading improve supported by the auto industry, government, retail and fast-moving consumer goods.
The question is whether more traditional advertising environs, such as corporate advertising spend, have been recovering since online has been doing better recently. The figures are expected to be difficult, considering the broadcast company can not afford huge cash burns if conditions remain challenging going into 2021.
“We are more hopeful about the performance of ITV’s Studios business, which produces both scripted and unscripted content for ITV and third party broadcasters at home and abroad,” analysts at Hargreaves Lansdown commented.
“While the first lockdown meant many productions were put on hold, we suspect it will also have seen viewers burn through back-catalogue material, increasing demand for new content. ITV will be hoping that boosts activity going forwards.”
Burberry takes to the catwalk with interim results
Burberry Group PLC (LON:BRBY) has results for the six months to end September. The FTSE 100 luxury designer has been hit hard by the pandemic, with its trading dented already since January because of its focus on Asian markets, where the COVID-19 outbreak started weeks before Europe.
The first quarter saw revenues tanking by 49% due to store closures, while the second quarter is expected to see a 15%-20% drop after restrictions were relaxed in the summer. The market will look at the quality of sales, whether they were full-price, discounted or coming from higher-margin outlets, as well as profit guidance for the remainder of the year.
“Although its customers are mainly from higher income brackets with significant buying power, even in the midst of a global pandemic there still appears to be more reticence than usual to spend on big-ticket accessories,” analysts at Hargreaves Lansdown noted.
“Burberry has been trying to reach out to a younger market, with a tie-up with the Twitch streaming platform to showcase its latest collections and win over trendsetting influencers. We may see some success in that direction but with fresh lockdowns hitting its European and UK market, there are likely to be warnings of tougher times ahead again for the luxury brand.”
More struggles for WH Smith
WH Smith PLC’s (LON:SMWH) results should give investors a better understanding of the cost of the pandemic on shops in stations and airports. With people switching to working from home and travel bans instigated, the stationery seller has been hit in its key markets.
The board said in August it was considering cutting 1,500 jobs or 11% of its workforce to protect the balance sheet, so the results may come with updates on restructuring.
Looking ahead, the second lockdown may give an idea of how this Christmas season could look like.
“Its travel division was the main driver for growth before the pandemic, so the prospect of deserted railway stations and airports for potentially many more months will be a bitter pill to swallow,” analysts at Hargreaves Lansdown said. “There will be hope online purchases will make up some of the shortfalls but competing with the might of Amazon won’t be easy.”
National Grid to keep the lights on
National Grid PLC’s (LON:NG.) figures are unlikely to contain surprises for investors, as the electricity group appears to have handled the pandemic and resultant increases in energy usage with little cause for concern.
One area of interest will be the firm’s COVID-19 impact costs, which it has already noted could cost £400mln, mostly from its US business, so any changes to this number will be eyed closely. The area of concern is likely to be regulation, with a recent Ofcom report saying the firm does not offer good enough returns or invest enough in its network, both of which could potentially serve to pressure the all-important dividend.
Thursday November 12
Finals: WH Smith PLC (LON:SMWH)
Interims: Burberry Group PLC (LON:BRBY), National Grid PLC (LON:NG.), B&M European Value Retail SA (LON:BME), Enteq Upstream PLC (LON:NTQ), Mediclinic International Plc (LON:MDC), Norcros PLC (LON:NXR), Picton Property Income Ltd (LON:PCTN), QinetiQ Group PLC (LON:QQ.), Volex PLC (LON:VLX), 3i Group plc (LON:III)
Economic data: UK GDP, UK trade balance, UK production, US inflation, US jobless claims