GlaxoSmithKline’s (LON:GSK) second quarter update will be accompanied by new chief executive Emma Walmsley’s plans to revive both the brand and share price.
A clue as to what is to come was possibly the disposal of the Horlicks brand and the emphasis going forward is expected to be on Glaxo’s future as a major pharma group.
An over-reliance on the respiratory and HIV portfolio is regarded as a key weakness, as is a drug development programme that is seen as lagging its main rivals and falling some way short of convincing.
Solving these problems will take time, but some reassurance over the cash flow and dividend sustainability would definitely buy some and allow Walmsley look at the bigger picture.
Goldman Sachs predicts second quarter revenue of £7.3bn and earnings per share of 26.5p, numbers that the broker says are broadly in line with the market consensus. The fall in the value of sterling likely will flatter the performance of this big dollar-earning behemoth.
A new chief executive is also on its way at terrestrial broadcaster and telly programmes maker ITV, although in the case of Carolyn McCall, who is decamping from easyJet, the change-over won’t happen until next year.
McCall won’t have it easy at ITV, which is contending with a weak advertising market as business confidence takes a hit from Brexit uncertainty. In May, ITV said it expected an 8-9% fall in ad revenue in the first half.
Adam Crozier, when he was boss of the company, responded to the difficulties in growing ad revenue by expanding its production division. McCall may well continue this strategy but she will also need to find a way to retain ITV’s dominant position in UK TV advertising and grow new digital ad revenues as the company faces heightened competition from technology giants, including Facebook and Google.
Shore Capital is a fan of the stock and reckons short-term concerns over advertising spend overlook ITV’s medium term attractions.
"The latter includes: (a) an unrivalled ability to deliver a mass market commercial audience to advertisers via what is (in contrast to many digital platforms) a trusted and well understood medium; (b) the scale and commercial value of its content portfolio; and (c) the prospect of solid earnings per share growth, a very attractive income progression (surplus cash flow three year aggregate dividend per share growth 39% excluding further 'specials'), and strong cash generation (providing fuel for acquisitions, dividend growth / special payments, and de-leveraging an already under-geared balance sheet)."
The main focus in Wednesday’s interims is likely to be the health of the core UK market, according to Hargreaves Lansdown analyst, George Salmon.
“We’ll be interested to see what the outlook for the rest of the year is,” Salmon said.
Accountancy software giant Sage’s trading statement should provide an update on full-year guidance and also give a division-by-division run-down on recent performance.
In its half-year report, underlying year-on-year organic growth in at 5.7%, with the pace picking up in the second quarter, prompting management to express confidence that a growth rate in excess of 6.0% could be achieved over the full year.
On the macro-economic front, UK gross domestic product is expected to have grown 0.2% in the second quarter, as it did in the first, which would push year-on-year growth down to around 1.7% from 2.0% in the first quarter.
Significant announcements expected
Interims: Berendsen PLC (LON:BRSN), Centaur Media PLC (LON:CAU), GKN PLC (LON:GKN), GlaxoSmithKline plc (LON:GSK), Hammerson PLC (LON:HMSO), Huntsworth PLC (LON:HNT), International Personal Finance PLC (LON:IPF), ITV plc (LON:ITV), Jupiter Fund Management PLC (LON:JUP), Staffline Group PLC (LON:STAF), Tullow Oil plc (LON:TLW), Unite Group PLC (LON:UTG),
Finals: Joules Group PLC (LON:JOUL)
Trading statements: 3i Group PLC (LON:III), Antofagasta PLC (LON:ANTO), Brewin Dolphin Holdings PLC (LON:BRW), Compass Group PLC (LON:CPG), Marston's PLC (LON:MARS), The Paragon Group of Companies PLC (LON:PAG), Sage Group PLC (LON:SGE),