Following the short-lived takeover approach from Kraft Heinz Co (NASDAQ:KHC) earlier this year, Unilever plc (LON:ULVR) unveiled its ‘Connected 4 Growth’ programme aimed at improving shareholder value.
That programme included targets such as boosting underlying margins to 20% by 2020, and investors will be looking to see what progress is being made under this new strategy when the Anglo-Dutch conglomerate reports its half year results on Thursday.
Eyes will also be focused on business in Latin America, an exciting, high-growth potential area for Unilever but one that has been beset by macroeconomic troubles recently, particularly in Brazil, as was evident in the first quarter.
Last month’s acquisition of Hourglass, a luxury cosmetics brand, took Unilever even further into the premium personal care market following on from other recent deals in skin and hair care so it will be interesting to see how that division is coming along.
Vodafone improvements eyed
Back in May in Vodafone PLC’s (LON:VOD) full-year results, investors overlooked a €6.1bn loss and instead focused on the increased dividend and the confident outlook for the current year.
Given that guidance was king back then, the telecoms company will need to start delivering on those words when it gives its quarterly update on Friday.
Investors will be looking for the improvements in its European business to have continued, while they will also hope that issues with the UK and Indian operations experienced last year have at least lessened, if not gone away altogether.
As for the hit to first half numbers from the abolition of EU roaming rates last month, City broker Numis expects the impact to be “transient”.
More generally, Numis said: “Prospects for value growth have started to improve and we see numerous standalone reasons to believe this recovery will last and gather pace.”
Summer holiday boost for easyJet
A third-quarter trading update from easyJet PLC (LON:EZJ) on Thursday will give an idea of the strength of summer trading for the discount airline after a weak first-half performance due to a combination of currency pressures from the weaker pound and the later timing of Easter.
Days after revealing that it is looking for approval to establish a new airline, which will be headquartered in Vienna, to enable it to continue to operate flights both across Europe and domestically within European countries after Brexit, easyJet should see a better performance with summer 2016 having been impacted by the EU vote uncertainties.
With the weak first-half numbers in July, the budget airline’s boss, Carolyn McCall noted that increased bookings this year reflected “growing evidence that consumers are prioritising expenditure on flights and holidays above other non-essential items”.
Game on for Ashley
Sports Direct International PLC (LON:SPD) will report full year results on Thursday in the wake of a legal spat over what founder Mike Ashley allegedly said at London pub, and with a move this week to buy a 25% stake struggling video games retailer Game Digital PLC. (LON:GMD).
In an effort to boost business, Sports Direct has also been expanding its portfolio with the acquisition of 50 stores in the US under the Bob’s Stores and Eastern Mountain Stores brands.
Sports Direct has also acquired stakes in French Connection (LON:FCCN) and department store chain Debenhams(LON:DEBS), Findel PLC (LON:FDL) and JD Sports PLC (LON:JD.).
Liberum expects the FTSE 250 retailer to report a fall in full year adjusted pre-tax profit to £126mln, down from £275mln on the back of its acquisition spree and the hit from a weaker pound, while sales are forecast to rise to £3.1bn from £2.9bn.
The group’s the first-half results in December saw Sports Direct report a 57% slump in profits, battered by the fall in the value of the pound after the Brexit vote.
Failing to deliver
Royal Mail PLC (LON:RMG) has been losing market share in parcel deliveries amid rising competition, analysts have warned ahead of its trading update on Tuesday.
The postal operator has become increasingly reliant on revenue from its parcels division as the advance of the internet means less people are sending letters. But fierce rivalry from the likes of Hermes and Yodel has put pressure on the parcels business.
Adding to the competition, Amazon has built its own network to deliver products it sells.
“We still believe Royal Mail will continue to lose market share in Parcels, with weaker exposure to the fastest growing segments,” Liberum analyst Gerald Khoo said, repeating a ‘sell’ rating on the stock and cutting the target price to 385p from 400p.
“Our concerns on productivity have risen, with parcel trends a headwind and past success driving toughening comparatives.”
The number of packages and parcels in the UK grew by 65% to 2.8bn between 2012 and 2016, according to a recent report by market research firm, Mintel. In comparison, Royal Mail’s volumes grew by just 8% between March 2013 and 2017.
Liberum cut its earnings per share forecast for fiscal year 2018 by 13%, saying: “We believe Royal Mail will not be able to fully offset the structural decline in letter revenue with growth in parcels, and that it will struggle to bridge the gap with productivity improvements as it faces headwinds from higher workloads on parcels and against toughening comparatives.”
Significant events expected:
Monday July 17
Trading updates: City of London Investment Group PLC (LON:CLIG), Petropavlovsk PLC (LON:POG), Rio Tinto PLC (LON:RIO)
Finals: Conviviality PLC (LON:CVR)
Tuesday July 18
Operational review: Rio Tinto PLC (LON:RIO)
Trading updates: Alliance Pharma plc (LON:APH), British Land Company PLC (LON:BLND), Clinigen Group PLC (LON:CLIN), DotDigital Group PLC (LON:DOTD), EMIS Group PLC (LON:EMIS), Experian PLC (LON:EXPN), Royal Mail Group PLC (LON:RMG), Safestyle UK PLC (LON:SFE)
Finals: Casleton Technology PLC (LON: CTP); Ideagen plc (LON:IDEA), IG Group Holdings PLC (LON:IGG), NCC Group PLC (LON:NCC)
Interims: Synectics PLC (LON:SNX)
Economics: UK June CPI, RPI, PPI, inflation numbers
Wednesday July 19
Operational review: BHP Billiton plc (LON:BLT)
Trading updates: Evraz plc (LON:EVR), QinetiQ Group PLC (LON:QQ.), Severn Trent PLC (LON:SVT), Talktalk Telecom Group PLC (LON:TALK), Tristel Plc (LON:TSTL), RPC Group PLC (LON:RPC)
Interims: Drax Group PLC (LON:DRX); Q1 - Wizz Air Holdings PLC (LON:WIZZ)
Economic data: US housing starts
Thursday July 20
European Central Bank policy decision at 12.45pm
Interims: Howden Joinery Group PLC (LON:HWDN), Nichols plc (LON:NICL), Unilever plc (LON:ULVR)
Trading updates: Anglo American PLC (LON:AAL), Premier Foods PLC (LON:PFD), Science in Sport PLC (LON:SIS), SSE plc (LON:SSE)
Economic data: UK retail sales; UK weekly jobless
Friday July 21
Interims: Beazley PLC (LON:BEZ), Capital & Counties Properties PLC (LON:CAPC)
Trading updates: AO World PLC (LON:AO.), Close Brothers Group PLC (LON:CBG), Empressaria Group PLC (LON:EMR), Vodafone Group PLC (LON:VOD)
Economic data: UK public sector borrowing numbers