Property investor Segro (LON:SGRO) is expected to report full year earnings at the upper end of analysts’ expectations on Friday.
In a January trading update, the industrial warehouse developer reported a “strong end to 2016” and said it sees both net asset value (NAV) and adjusted earnings per share reaching the top end of the consensus forecast range.
The guidance range for 2016 earnings per share is between 18.40p and 19.70p while the NAV range of estimates is between 459p and 499p.
The FTSE 250-listed group said an independent valuation of Segro’s assets at 31 December 2016 indicated a 4.8% like-for-like increase in the value of its portfolio during the year, or 3% in the second half.
The increase was supported by growth in the value of its UK portfolio and modest yield compression. It was also boosted by a rise in the value of a former industrial estate in London’s Park Royal, which Segro conditionally agreed to sell, along with development gains in the UK and Continental Europe.
Segro said it had “continued to deliver a strong operational performance, with good leasing activity and strong like for like rental growth, particularly in the UK, and further encouraging progress with the development pipeline”.
The company added that 19 of the 27 development projects within its active programme at 30 June have been completed
Peel Hunt said following Segro’s “relatively strong” trading statement last month, the full year results are unlikely to offer many surprises.
The broker expects NAV of 464.0p in 2016, compared to 462.5p the previous year.
Adjusted pre-tax profit is forecast at £145.3mln, up from £134.2mln in 2015, while adjusted earnings per share is projected to climb to 18.9p from 18.4p.
Peel Hunt predicts a dividend per share of 16.3p, compared to 15.6p a year earlier.
“Elsewhere we look for a positive outlook on rental growth as well as further pre-lets and planning consents, which are key to driving the dividend towards 5%,” analyst James Carswell said.
UK retail sales data...
Away from corporate news, UK retail sales data from the Office for National Statistics will be in focus amid concerns higher inflation since the Brexit vote is beginning to deter shoppers.
Economists anticipate a 1.0% month-on-month increase in January retail sales, including auto fuel, following a 1.9% drop in December.
Compared to the same month a year ago, January sales are expected to rise 3.4% following a 4.3% year-on-year gain in December.
Howard Archer, chief UK and European economist at IHS Global Insight, said muted figures from the ONS after December’s month-on-month decline would fuel suspicion that consumers have started to reign in their spending as rising prices squeeze purchasing power.
“Worryingly for retailers - and for overall growth prospects - It looks inevitable that the fundamentals for consumers will weaken markedly as 2017 progresses,” Archer said. “Purchasing power looks set to be increasingly squeezed as inflation rises appreciably due to the weakened pound and earnings growth is pressurised by companies looking to limit pay to contain their total costs.”
The ONS on Tuesday revealed consumer prices rose last month at the fastest pace since June 2014. Consumer prices gained 1.8% compared with a year earlier, accelerating from 1.6% growth in December
A weaker pound following the UK’s vote to leave European Union has pushed import costs higher, prompting companies to pass on the charges to consumers.
Significant announcements expected Friday…
Finals: Essentra PLC (LON:ESNT), Kingspan Group (LON:KGP), Millenium & Copthorne Hotels PLC (LON:MLC), Segro PLC (LON:SGRO)