First half results from Whitbread plc (LON:WTB) will be the main focus on Tuesday, with the leisure giant’s first quarter performance having seen a solid start to the year thanks to growth at Premier Inn, although slowing growth at Costa Coffee remained a worry.
Costa’s like-for-like (LfL) sales in the three months to the start of June rose 1.1% year-on-year, having increased by 2.0% a year earlier, and that was already a decline from the 2.9% reported the year before that.
Neil Wilson, senior market analyst at ETX Capital thinks that Costa’s LfL sales may decline further in the second quarter, dragging the first half growth below 1%.
In a preview, he commented: “ Slowing LFL growth is a concern but a top line growth and a focus on more expensive ‘finer coffee’ should help.
“We’ll be watching for any signs that higher-margin finer coffee products as well as the newly-launched Cold Brew and Frostino lines are helping to improve sales and margins.”
Premier Inn’s Q1 performance was strong with like-for-like sales up 4.7% and total sales rising 9.2% after opening 9,000 new rooms over the last couple of years.
ETX’s Wilson said: “Recent IHG results appear supportive of further revenue growth and RevPar growth, where Premier Inn is lagging the sector. The weak (cheap?) pound has boosted tourism, which should act as a tailwind for Premier Inn revenues and revenues per available room. “
Further momentum wanted at Anglo American
Investors will expect further momentum in an improving operational performance from FTSE 100-listed mining giant Anglo American PLC (LON:AAL), which reports third quarter numbers on Tuesday.
Graham Spooner, investment research analyst at The Share Centre pointed out that commodity prices in general have further improved in the last quarter and investors will hope that the expansion of the Los Broncos and Collahuasi mines have progressed to take advantage of price rises.
In the past, the group was impacted by industrial action, mainly in South Africa and there is some hope that the end of this has been seen.
However, recently other mining groups have felt the effects of industrial disputes in other regions such as South America and there is some expectation that Anglo American to a certain extent will be impacted too.
Wealth of reasons to back St James’ Place
Another blue chip firm, St James’ Place Capital PLC (LON:STJ) will also report third quarter numbers, with Numis Securities expecting the wealth manager to disclose funds under management of £85.5bn, and quarterly net inflows of £2.0bn.
The broker said: “Our view remains that we expect significant growth in both underlying cash EPS (+35%) and DPS (+25%) this year, which supports our positive recommendation.”
Competition weighs on IPF
A trading update from doorstep lender International Personal Finance PLC (LOON:IPF) is expected to highlight the intense competition that is continuing to impact its business in Southern and Northern Europe, with the exception of the Hungarian market.
In a preview, Numis Securities said it continues to expect an interest rate cap to be announced in Romania but to date this has not happened, although income verification regulation is expected to have negatively impacted this market.
The broker, however, expects IPF to benefit from a continued recovery in Mexico against the poor performance seen in 2016 with good loan growth coupled with improved credit quality.
Numis concluded: “Overall we continue to see IPF as a blend between mature and growing markets with a long shadow of regulatory change cast over what we see as an attractive future.”
Bloomsbury still magic
Harry Potter books firm Bloomsbury Publishing PLC (LON:BMY) released an encouraging first quarter update in July which indicated that revenues were up 19% in the period due to a strong performance from its Consumer titles.
Hopefully that strong performance will have carried over for the first half as a whole, with profit for the full year said in July to have been tracking in line with expectations, which Numis predicts at £12mln pre-tax.
Significant events expected on Tuesday October 24:
Trading updates: Anglo American PLC (LON:AAL), Brooks Macdonald PLC (LON:BRK), Bunzl PLC (LON:BNZL), Carpetright PLC (LON:CPR) International Personal Finance PLC (LON:IPF), McBride plc (LON:MCB), Shoe Zone PLC (LON:SHOE)
Interims: Bloomsbury Publishing PLC (LON:BMY), Gear4Music Holdings PLC (LON:G4M), St James’s Place (Q3) (LON:STJ), Whitbread plc (LON:WTB)