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Unilever, Debenhams and Rentokil Initial in the spotlight as updates loom

Thursday looks a pretty busy day for investors with a number of important updates due.

Debenhams store front
Investors are nervous ahead of Debenhams results

Anglo-Dutch consumer goods giant Unilever plc (LON:ULVR) is set to issue a first-quarter update on Thursday, having spent most of last year reviewing its business in the wake of the rebuffed US$143bn takeover bid from Kraft Foods.

Regarded for decades as the corporate equivalent of a super-tanker, the group announced in March plans to transform itself into a “simpler, more agile and more focused business”.

The announcement was the latest phase in the FTSE 100-listed group’s attempt to shed its reputation as a lumbering giant.

Thursday’s update will be too soon to determine whether the latest proposed restructuring is having a galvanising effect and will be more about progress towards the Marmite-maker’s ambitious target of achieving a 20% operating margin by 2020.

Top-line growth will also be a focus, with the group having achieved underlying year-on-year sales growth in 2017 of 3.1%; strip out the spreads business (Flora et al), which is being sold, and the growth rate improves to 3.5%, which is comfortably within the 3% - 5% range management has set.

Dividend cut fear for Debenhams

Investors will be nervous awaiting first half numbers from department stores group Debenhams PLC (LON:DEB) amid fears of a possible dividend cut as sales stay under pressure.

At the beginning of January analysts at Deutsche Bank and Citigroup predicted the FTSE 250-listed firm will likely to announce a dividend cut after a disappointing Christmas trading update.

Debenhams saw a 1.8% decrease in total in like-for-like sales in the 17 weeks to December 30, driven by a decline in the UK where it faced tough competition and a slowdown in consumer spending.

Swiss investment bank UBS recently trimmed its target price for Debenhams to 18p from 23p, saying the department store chain could see costs of over 13p for every £1 of in-store sales because of a channel shift.

Meanwhile, Mike Ashley’s Sports Direct International PLC (LON:SPD) is waiting in the wings, sitting on an increased total holding of 29.7% in Debenhams .

Pesky currencies eyed for Rentokil Initial

A first-quarter update from pest control and support services group Rentokil Initial PLC (LON:RTO) on Thursday will be watched closely after 2018 estimates were cut following full-year 2017 numbers at the start of March.

City analysts said then that they expected to reduce pre-tax profit estimates for the FTSE 100-listed firm by 4% amid concerns over the adverse impact of currency movements, despite the 2017 results matching expectations, sending its shares lower.

However, US broker Jefferies International upgraded its rating for Rentokil to ‘buy’ from ‘hold’ noting that the group had maintained momentum in pest control, improved its balance sheet capacity, while the risk-reward profile has been boosted by the pull-back in share price.

Significant events expected on Thursday April 19:

Trading update: Unilever plc (Q1) (LON:ULVR), Rentokil Initial PLC (LON:RTO), Sky PLC (Q3) (LON:SKY)

Finals: Camelia PLC (LON:CAM), Hvivo PLC (LON:HVO), Xeros Technology Group PLC (LON:XSG)

Interims: Debenhams PLC (LON:DEB), Acacia Mining PLC (Q1) (LON:ACAA), Gattaca Plc (LON:GATC)

Ex-dividends: To knock 9.8 points off FTSE 100 – BAE Systems PLC (LON:BA.), Barratt Developments PLC (LON:BDEV), Croda International PLC (LON:CRDA), Informa PLC (LON:INF), Lloyds Banking Group PLC (LON:LLOY) Standard Life Aberdeen PLC (LON:SLA)

Economic data: UK retail sales; US weekly jobless claims; US Philly Fed index

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