The company, which is one of the biggest on AIM, didn’t help itself when it went silent during November, a month in which it has traditionally told investors that results will be way ahead of forecasts.
Normal service was resumed at the start of this year when it lifted its forecasts for the year just gone and investors will be hoping for a repeat in Tuesday’s 2018 results.
Thanks to January’s update, we already know that revenues will likely rise by 39%. There was no word on profits, but analysts think the UK sugar tax and investment into the US might have eaten into margins a little. Underlying earnings (EBIT) are seen coming in at around £74mln.
The UK is still Fevertree’s biggest and fastest growing market but that can’t last forever, and investors will want to see other areas starting to pull their weight, particularly the US.
Margin squeeze at AG Barr
The company, which also makes Rubicon and Strathmore drinks, reported steady revenue growth in January’s trading update and investors will want to see if that is reflected in the profit column.
AG Barr hasn’t been too badly hit by the UK government's sugar tax as its new Irn Bru recipe was below the threshold.
“That’s helped it grab market share, but extra marketing investment means margins have been pinched,” said Hargreaves Lansdown analyst Sophie Lund-Yates.
House broker Shore Capital expects operating profit to have edged 1% higher to £45.5mln. That compares with consensus forecasts of £46.4mln and guidance of delivering profit ahead of last year.
Looking ahead, AG Barr has said it plans to return to a more “value-led” strategy this year, which suggests that price rises could be on the way.
Ferguson’s UK restructuring in focus
Investors in blue chip plumbing and heating distributor, Ferguson Plc (LON:FERG) will be hoping to see evidence that the US-focused firm’s UK turnaround plan is paying off in its first-half results on Tuesday.
The FTSE 100-listed plumbing and heating products group is on track to complete a restructuring of its UK business this year to address weak repair, maintenance and improvement markets.
The company has closed branches and exited low margin business in the UK as part of its plan to overhaul the division.
In the first quarter, continued strength in its North American operations offset a fall in the UK to bring revenue up 8.5% to £3.3bn and organic sales up 6.7%.
UBS expects second-quarter organic sales growth of 5.3% in the first quarter, led by another strong performance in the US business.
For the first half, it predicts underlying earnings (EBITDA) of US$747mln, up from US$698mln he previous year, and sees the interim dividend being raised to US$0.69 from US$0.57.
Updates to flow from United Utilities
The regulatory environment has been overhanging on the share prices of listed water companies such as United Utilities (LON:UU. for a while now.
Last summer’s exceptionally hot weather also added costs to for the groups as they tried to safeguard supplies and resources, so investors will be keen to get more details United Utilities updates them on Tuesday.
While water shares are attractive share for income investors, concerns over the sustainability of dividends have been raised beyond 2019 as the groups reduce bills and cut capital expenditures in line with regulatory requirements.
Deutsche Bank downgraded its rating for UU’s on Monday to ‘hold’ from ‘buy’ on valuation grounds ahead of the update.
Significant events expected on Tuesday March 26:
Trading updates: United Utilities PLC (LON:UU.)
Finals: Fevertree Drinks PLC (LON:FEVR), AG Barr PLC (LON:BAG), Moss Bros Group plc (LON:MOSB), Vectura PLC (LON:VEC), S&U PLC (LON:SUS), Personal Group Holdings PLC (LON:PGH), Alliance Pharma PLC (LON:APH), Access Intelligence PLC (LON:ACC), Boku Inc (LON:BOKU), T Clarke PLC (LON:CTO), Gulf Marine Services PLC (LON:GMS), LiDCO Group PLC (LON:LID), Michelmersh Brick Holdings Plc (LON:MBN), Pelatro PLC (LON:PTRO), STM Group Plc (LON:STM), XL Media PLC (LON:XLM)
Economic data: UK quarterly GDP; UK balance of payments; US durable goods orders; US Case-Shiller home price index