It is almost the end of May – and not just the UK prime minister of that name! – and with a bank holiday on Monday, the corporate and economic diary in the coming week is looking pretty thin.
Only one FTSE 100-listed company – Johnson Matthey PLC (LON:JMAT) - is set to provide an update, and even the flow from the FTSE 250-listed firms looks to be slowing to a trickle, although results from the likes of transport firm FirstGroup PLC (LON:FGP) and newspaper publisher Daily Mail and General Trust PLC (LON:DMGT) should provide some interest.
Clean Air to provide breather for Johnson Matthey
Johnson Matthey's preliminary full-year results on Thursday will be the chemicals company’s first numbers since interims in November.
The blue-chip group, which supplies chemicals and catalytic convertors, increased its pre-tax profit by 19% to £244mln in the six months to 30 September, as revenue rose 10% to £7.11bn.
The firm’s management said then that they expected full-year operating profits at constant currency rates to be towards the upper end of its guidance for “mid to high single digit growth”, with currencies providing a £2mln benefit.
The performance of catalytic converters in the Clean Air division will be key to the group’s full-year performance as they account for 70% of operating profits.
The New Markets operation will also be a big focus as Johnson Matthey’s investors hope to hear about the development of the group’s eLNO battery material, which it reckons is cheaper and more powerful than materials currently used in electric vehicle batteries but is not set to begin production until 2021/22.
“The electrification of the automotive sector has the potential to render JMAT’s core catalysts business redundant. So while investors shouldn’t expect profits from batteries any time soon, updates will nonetheless be pawed over by for signs of potential,” according to analysts at Hargreaves Lansdown.
FirstGroup board to put best foot forward
FirstGroup has come under fire from an activist investor in recent weeks, and Thursday’s full-year results will give bosses a chance to explain why they’re the right people for the job.
New York hedge fund Coast Capital has called for an extraordinary general meeting at which it wants to ask shareholders to get rid of six of FirstGroup’s eleven board members.
One of Coast’s partners recently said the current directors range from “shades of super destructive to extraordinarily under-qualified”.
But the mid-cap transport group is adamant it has the “right team with the right experience” in place, and it will no doubt be looking to hammer that message home.
As for the business itself, UK bus ticket sales are likely to have continued to fall over the past few months, although investors will be hoping rail performance has picked up after disruption at the end of 2018.
In the US, FirstGroup’s Greyhound buses business endured a “difficult trading environment” in the opening few months of the financial year, but bosses did say in February that they were seeing “early signs of improvement”.
More ad woes predicted for DMGT
It has been a while since we last heard from Daily Mail and General, but the newspaper publisher is due up with its half-year results on Thursday.
Since January’s trading update, Brexit has been delayed, UK prime minister Theresa May has announced she will step down, and US Present Donald Trump has targeted everyone from China to Europe to Iran.
The result is that analysts expect companies to have been holding back on advertising spend in recent months while they wait for clarity about the current wealth of global uncertainties.
On top of that, retailers - who typically spend a lot on advertising their latest products - are going through a rough patch, which won’t help things either.
Another issue facing the company is the impact of slowing property sales on DMGT’s property information services business, which accounts for about 10% of revenues.
The company kept its full-year forecast in place back in January, but it will be interesting to see if it does the same on Thursday.
Results to flow from Pennon
Elsewhere, the mid-cap owner of supplier South West Water and waste management business Viridor, Pennon Group plc (LON:PNN) will also drop its annual results on Thursday, a week later than its listed peers Severn Trent PLC (LON:SVT) and United Utilities PLC (LON:UU.).
The water sector as a whole has been under pressure after regulator Ofwat last month published harsher than expected draft determinations for prices the companies can charge for the five years from 2020.
Furthermore, investors are worried about the possibility of the Labour Party’s aim to renationalise water firms at book value given the distinct possibility of a general election in the medium term.
In a recent note, analysts at Deutsche Bank said the “slightly more conservative” estimates from Ofwat for both allowed returns and outperformance had led it to lower its equity return estimates very slightly.
The German bank expects Pennon to report strong growth in full-year profits driven mainly by the increased contribution from energy-from-waste plants at Viridor, forecasting a 9% increase in pre-tax profit to £353mln along with a 7% hike in the dividend.
Wizz Air hopes for smoother ride that its rivals
Staying on the second line, given that budget airlines have been suffering some turbulence recently, investors in Wizz Air Holdings PLC (LON:WIZZ) will be hoping the pink and purple carrier has dodged some of the industry’s bigger storm clouds when it reports its final results on Friday.
While the firm is still likely to be impacted by factors that have been pressuring the rest of the sector - namely rising fuel costs, Brexit uncertainty and fierce competition leading to fare cuts - there is hope that its exposure to the faster-growing economies of Eastern Europe will help offset some of those worries.
The group previously said it expected its net profits for the year to be at the “upper half” of its guidance range of between €270mln-€300mln and has also been trying to keep costs under control and drive up ancillary revenues from extras like food and extra leg room, so any benefits from this will likely bring some cheer.
Analysts at Numis expect the airline to continue to take market share from national and legacy carriers as Wizz is one of the lowest cost airlines and “material cost tailwinds” are yet to come in.
De La Rue looks to cash in on recent contract wins
Banknote printer De La Rue plc (LON:DLAR) has started 2019 on a high note, inking multiple contracts in February and March as well as a joint venture agreement in April, so investors may be expecting some contributions from these in the firm’s full year results on Thursday.
The company’s tax stamp division has made particular progress with contracts secured for services in six European countries as well as in Saudi Arabia, while the joint venture will see it partner with the government of Kenya to provide currency printing services.
The group maintained its full year expectations back with its interim results in November, so shareholders will be looking to see if all those wins may have printed some extra cash for the firm.
Will Amigo results prove friendly or friendless?
The firm, which floated last June at premium and gained promotion to the FTSE 250 index almost immediately given its £1.3bn initial valuation, has seen its share price go through the wringer since, currently trading at 213p well below the 275p IPO price.
A report by the Financial Conduct Authority (FCA) in March this year raised concerns over the effectiveness of affordability checks carried out by lenders, with the company also having seen significant negative commentary from the media after a series of articles in the Time that had questioned Amigo’s historical business practices.
This culminated in news at the end of April of the surprise resignation of the lender’s CEO, Glen Crawford, who is to step down in the summer to undergo medical treatment for a degenerating spinal condition and will be replaced by Hamish Paton, the former CEO of rent-to-own firm Brighthouse, who had initially planned to join the company as its chief commercial officer in May.
Analysts at Numis Securities expect Amigo to report strong growth in customers (up 22.5%), while loans and advances up 17.5%, income ahead 29.5%, and profit increasing 33.5%.
In a preview, the Numis analysts said: “Credit quality is expected to have declined due to the expansion of the loan book towards non-home owning guarantors and impairment is forecast to increase to 9.4% of the average loan book from the 8.5% reported last year.”
They added: “Despite our expectation of a strong trading performance for the year to March 2019 and the expectation that current trading and the trading outlook are both positive, regulatory concerns are likely to continue to weigh on the shares.”
Significant announcements expected for week ending May 31:
Monday May 27:
UK Bank Holiday
Tuesday May 27:
Economic data: UK BBA mortgage lending; US Case-Shiller house price index; US consumer confidence
Wednesday May 29:
Economic data: US MBA mortgage applications
Thursday May 30:
AGMs: hVivo PLC (LON:HVO)
Economic data: US weekly jobless claims; US preliminary GDP; US pending home sales
Friday May 31:
Economic data: Nationwide house prices; US personal income/spending; US Chicago PMI; US University of Michigan final consumer confidence index