With a UK bank holiday curtailing the start of the last week of the August lull and the first day of what could be a busy September, the corporate diary is looking fairly mediocre, with few blue chips reporting and the main focus to be on Friday’s US jobs report for August.
Packaging firm Bunzl PLC (LON:BNZL) is the only FTSE 100-listed firm scheduled to report in the week ahead, with its first half results due on Tuesday.
Back at the end of June, Bunzl disclosed that its revenue in the period rose by 7% at constant exchange rates, boosted by underlying growth and acquisitions.
In a recent preview of the numbers, Deutsche Bank raised its share price target for Bunzl to 2,590p from 2,575p and reiterated a ‘buy' rating on the stock.
The German bank’s analysts said: “H1-17 should not be very surprising given the pre-close on June 28. On margins, the dilution from new business in the US will be a key variable.”
They added that they do not expect any more large M&A from the FTSE 100-listed group, given a record spend in the year-to-date, but said “tailwinds from bolt-ons are possible”.
The analysts pointed out: “We see Bunzl as a well-managed consolidator with strong cash generation and M&A opportunities across several fragmented markets.”
Hays hopes highs
On the second line, recruiter Hays PLC (LON:HAS) has built up investors’ hopes ahead of its full year results on Thursday by saying that it expects profit to be ahead of market forecasts.
In a trading update in July, the company said annual operating profit will exceed analysts’ estimates of £209.5mln after delivering a record 7% like-for-like increase in total net fees in the final quarter to 30 June.
Net fee growth in the fourth quarter was boosted by an 11% like-for-like rise in both the Asia Pacific region and the Continental Europe and rest of the world divisions, offsetting a 5% decline in the UK and Ireland where Brexit uncertainty hit business confidence.
Liberum analysts said: “Fundamentally we see the group’s attractive exposure to contract recruitment (60% of net fee income), leading position in structural growth markets such as Germany, and attractive cash return profile as reasons to remain positive on the stock.”
The analysts expect the company to announce a full year dividend of 3.05p and a special dividend of 5p, bringing the total dividend yield to 4.8%.
WH Smith fairly stationary
A pre-close season trading statement from WH Smith PLC (LON:SMWH) on Wednesday is likely to maintain full year guidance although historically the retailer has not included any actual numbers.
In a preview, analysts at UBS said the update is likely to highlight a gross margin uplift and say cost savings remain on track but that conditions on the High Street remain challenging.
The Swiss bank forecasts second half like-for-like sales growth of 4% for WH Smith’s Travel business, implying around 3% growth for the fourth quarter compared to 5% in the third quarter and the first half as comparatives get slightly tougher.
On the High Street, the UBS analysts assume no improvement from the 4% like-for-likes sales decline in the third quarter, even against a slightly easier comparative from last year.
Solid if not spectacular from Ladbrokes
Given that Ladbrokes Coral Group PLC (LON:LCL) updated on its first half performance only a few weeks ago, investors already have a pretty good idea of what to expect on Thursday.
Like a lot bricks-and-mortar retailers, high street bookmakers are struggling to get people through the doors and first-half revenues from Ladbrokes and Coral stores are expected to fall 6%.
As we’ve known for a while, online betting is increasingly becoming the place to be and the bookie recently forecast 17% growth in digital revenues for the opening six months of the year.
Synergies from the recent merger were upgraded to £150mln per year by 2019 in the recent trading update, which is more than double the original estimate.
It’ll be interesting to see where the group thinks it can now save this extra money in the coming years.
One of the key concerns among investors is changes to industry regulations, particularly those surrounding the lucrative in-store machines, so that will no doubt be a focus for many.
As for cold hard numbers, UBS is projecting revenues growth of 1% to £1.12bn and an operating profit of £157mln, with UK retail still dominating despite the state of decline it finds itself in.
Petrofac probe to dominate
Petrofac PLC (LON:PFC) will be doing well if investors aren’t mostly discussing regulatory matters when the oil services group releases half yearly results on Wednesday.
News of a Serious Fraud Office (SFO) investigation emerged in May, and just last week shareholders learnt of censure against chief executive Ayman Asfari for insider trading charges in Italy.
Italian regulator CONSOB has fined Asfari €300,000 and has issued an order confiscating property with a value of €385,000. It has also disqualified the Petrofac boss from taking any administrative, management or supervisory positions in any Italian-listed companies for 12 months.
Asfari has already asked CONSOB to revoke the decision at the earliest opportunity, Petrofac added, and he intends to appeal the decision.
Stockbroker Hargreaves Lansdown highlighted the fact that Petrofac shares are down some 45% since the SFO news, but, cautioned that investors are unlikely to hear more detail on the investigation as part of these results.
“Instead investors should focus attention on the order book,” the broker said in a preview note.
“Petrofac had been struggling to keep a flow of new projects coming onto the books even before the SFO investigation – as low oil prices caused oil producers to delay new developments. An SFO investigation hanging over the group is unlikely to make it a more attractive partner in a market where work is low on the ground and bidding is competitive.”
Numbers a non-event for Jimmy Choo
Back in June, Jimmy Choo PLC (LON:CHOO) chairman Peter Harf said the luxury shoemaker was trading strongly and that the “prospects for the business [were] stronger than ever”.
Given that bullish statement, the half-year numbers on Thursday are expected to be pretty good but with the recent news that Michael Kors has agreed to snap up the company for US$1.2bn, they’re largely irrelevant.
Investors will be more interested in finding out how the sale process is coming along and if it’s still on track to complete in the final quarter of this year.
New broom at HSS Hire
First half numbers from HSS Hire Group PLC on Wednesday will be the first to be delivered by new chief executive officer, Steve Ashmore, who only joined the firm on June 1 having previously held executive roles at Exel, Wolseley and Brammer.
In a pre-close season trading update on July 4, HSS said its underlying revenue in the second quarter was “marginally ahead of the prior year with an improving Rental revenue trend”.
Ashmore had commented: "Having only joined the Group towards the end of the quarter, I have spent the last few weeks familiarising myself with its operations and meeting the team.
“While this process is ongoing, it is already clear to me that we have a fundamentally strong business with the building blocks in place to deliver improved customer experience and shareholder returns.“
In the first quarter, HSS reported an adjusted operating loss of £4.5mlm compared with a profit of £4.9mln a year earlier.
US jobs growth eyed
Aside from the smattering of results, the main attraction this week will be the latest US jobs data, due as always on the first Friday of the new month.
July saw a 209,000 rise in US non-farm payrolls, better than expected, while the US unemployment rate fell to 4.3%, a new 16-year low, and average wages rose by 0.3%, the highest monthly rise since last October.
Together, the data lent support to the hawks at the Federal Reserve and increased the odds of another hike in US interest rates later this year.
The August data could lend more evidence to support a further increase in US rates, with economists at HSBC forecasting a 180,000 rise in non-farm payrolls, and a steady jobless rate at 4.3%.
Significant events expected on:
Monday August 28
UK Bank Holiday
Tuesday August 29
Finals: OPG Ventures PLC (OPG)
Interims: Bunzl PLC (LON:BNZL), Polymetal International PLC (LON:POLY)
Economic data: Nationwide house price index
Wednesday August 30
Trading updates: Diploma PLC (LON:DPLM), WH Smith PLC (LON:SMWH)
Interims: BATM Advanced Communications Ltd (LON:BVC), The Gym Group PLC (LON:GYM), HSS Hire Group PLC (LON:HSS), IFG Group PLC (LON:IFG), Petrofac Ltd. (LON:PFC), Pure Tech Health PLC (LON:PRTC)
Economic data: UK consumer credit, M4 money supply; second reading US second quarter GDP
Thursday August 31
Interims: Alfa Financial Software Holdings PLC (Q2) (LON:ALFA), Arrow Global Group PLC (LON:ARW), Churchill China PLC (LON:CHH), Jimmy Choo PLC (LON:CHOO), Chesnara PLC (LON:CSN), Eddie Stobart Logistics PLC (LON:EXL), Exova Group PLC (LON:EXO), Grafton Group PLC (LON:GFTU), Ladbrokes Coral Group PLC (LON:LCL), Restaurant Group PLC (LON:RTN), Satellite Solutions Worldwide Group PLC (LON:SAT), STV Group PLC (LON:STVG), Total Produce PLC (LON:TOT)
Economic data: GfK UK consumer confidence; US weekly jobless claims; US personal income, spending; US Chicago PMI; US pending home sales
Ex-dividend factors will clip 1.2 points off the FTSE 100 index with Croda International PLC (LON:CRDA), G4S PLC (LON:GFS), Hammerson PLC (LON:HMSO), International Hotels Group PLC (LON:IHG), and St James’s Place PLC (LON:STJ) all trading without entitlement to their latest payouts
Friday September 1
Interims: EMIS Group PLC (LON:EMIS)
Economic data: US non-farm payrolls, jobless rate, average weekly earnings; US construction spending; US ISM manufacturing report; University of Michigan final consumer confidence report