It will be another busy week to come for blue-chip updates, with a wide variety of firms on the roster including drugs giant AstraZeneca PLC’s (LON:AZN), mobile phones operator Vodafone Group PLC (LON:VOD), British Gas-owner Centrica PLC (LON:CNA), and postal delivery firm Royal Mail Group PLC (LON:RMG).
First up on Monday will be Centrica, shares in which have been going well since it announced full-year results in late February and laid to rest fears about the dividend.
Despite admitting it had a weak second half to 2017, primarily reflecting poor performance in energy supply to businesses and the struggles of its North America Business unit, the shares surged as it held its dividend and announced a new £500mln cost reduction programme.
Investors will likely be looking for updates on the cost savings performance of British Gas during the assault by “the Beast from the East” and news on company debt.
It is just over a month since British Gas announced tariffs would rise but as these increases do not kick in until the end of May it is probably too soon to determine whether this will hit customer numbers, though as ever with British Gas “churn” - the proportion of customers switching to another energy supplier – will be a major concern.
Drugs cycle bottoming out for AstraZeneca
Meanwhile, AstraZeneca will be the final release of the blue-chip crop on Friday.
The drugs firm’s product sales have edged lower in recent years due to the loss of patents on its Crestor (statin) and Seroquel (bipolar) blockbuster drugs.
But the cycle seems to have bottomed out, with product sales climbing slightly in the final quarter of last year, and the company itself is guiding for low single-digital growth in product sales in 2018.
Analysts at Jefferies noted a few weeks ago that the FTSE 100 group is “at a turning point” thanks to new drug launches and improving margins.
Strong growth is expected from Astra’s new cancer drugs, Lynparza and Tagrisso, with the latter recently being approved as the go-to treatment for lung cancer patients with certain mutations.
Deutsche Bank expects 1Q sales to reflect these strong launches with total sales of Tagrisso, Imfinzi, Fasenra, Calquence and Lynparza of US$520mln, up 128% year-on-year.
Investors might have had an update on the key MYSTIC lung cancer trial, but the drugmaker recently pushed back the timeline for that so it is unlikely to feature in Friday’s first-quarter results.
Vodafone more down to earth
Mobile phone networks operator Vodafone will have to go some in its full-year results release on Tuesday to top its blockbuster announcement six days earlier.
Then, after months of negotiation with Liberty Global, Vodafone revealed that it is to become Europe’s biggest quad-play (mobile, home phone, pay-TV and internet) operator after acquiring operations in four countries from the US cable giant.
The deal may put some vim into a company that has been regarded with a good deal less enthusiasm since it offloaded its Verizon Wireless stake.
Third quarter revenue trends did little to enthuse investors but Numis Securities thinks the market’s reaction was over the top.
It is forecasting full-year underlying earnings (EBITDA) of €14.75bn, earnings per share of 11.82 cents and a dividend of 15.1 cents. Free cash flow has been estimated at €3.80bn.
Given the fact the company has just splashed out on a big acquisition, investors might take a closer interest than usual in free cash flow and gearing, not to mention the dividend.
Changes to delivery at Royal Mail
Royal Mail’s final results on Thursday will mark the final full year numbers for outgoing chief executive Moya Greene,
It has already been announced that she will retire in September to be replaced by Rico Back, the current CEO of the General Logistics Systems, the group’s major European sUBSidiary.
In a preview of the numbers, Swiss bank UBS forecast Royal Mail reporting revenue £10.148bn, underlying earnings (EBITDA) of £1.042bln, and a dividend per share of 23.9p.
Analysts at the bank said: “Given the recent labour agreement and guidance that FY2018 Operating profit would not be less than £680m, we believe the focus will be on the FY2019 guidance.
“Current consensus is for Operating profit pre-transformation costs of £684m, i.e. flat year-on-year. This will be the last set of results with the current CEO but we do not expect any major strategy changes with the change in management.”
Strong interims expected from easyJet
Another blue-chip firm, discount airlines group easyJet PLC (LON:EZJ) is expected to announce strong interim results on Tuesday having reported increased numbers of passengers for the last three months, reflecting the likelihood of narrowing losses.
The orange airline said it flew 7.45mln passengers in April, up from 7.1mln a year ago, while in March the company carried 6.5mln passengers, up from 6.3mln despite the cancellations caused by the ‘Beast from the East’ cold weather and French industrial action.
The group’s load factor – the number of passengers as a proportion to the number of seats available – rose to 93.4% in March.
UBS expects easyJet’s first-half sales to come in at £2.13bn, up from £1.83bn a year earlier, with fare growth of approximately 9% and traffic of approximately 7%.
The Swiss bank also expects the airline’s pre-tax loss to narrow to £113mln, down from £212mln a year earlier.
Burberry brand revival
Elsewhere, Burberry Group PLC (LON:BRBY), which is currently going through a transitional period after a raft of management changes, will announce its final results on Wednesday.
In early March, the FTSE 100-listed firm appointed former Givenchy designer Riccardo Tisci as its new creative chief to succeed Christopher Bailey while in April Gerry Murphy was appointed to the board as the luxury goods group’s chairman designate and Gavin Haig was appointed to the newly created position of chief commercial officer.
Adding to the era of change, last week Groupe Bruxelles Lambert, the holding company of Belgian billionaire Albert Frere, sold its entire 6.6% stake in the FTSE 100-listed luxury goods firm raising approximately £498mln.
In a preview of the numbers, UBS expects Burberry’s full-year underlying earnings (EBIT) to be £453mln, which is broadly in line with consensus, and says the focus will be on the outlook for the current year and whether a new share buyback is announced.
'Beast from the East' to hit pub chains’ sales
Away from the blue chips, Wednesday could be a messy one for two mid-cap pub chains which will both report their half-year results on that day.
In their last updates earlier this year, both Mitchells & Butlers PLC (LONMAB) and Marston’s plc (LON:MARS) said they struggled over the Christmas period with the bad weather.
Things didn’t get much better in the New Year, though. Retailers and restaurants all saw fewer people coming through the doors as a result, and analysts are predicting softer sales for the pUBS, too.
On top of the weather, both companies are also having to deal with rising costs and weaker consumer confidence.
More specifically for Marston’s, in its last update it had yet to pass on the aforementioned cost increases to its customers which dented margins, so it will be interesting to see if it has carried on with this strategy.
If the numbers disappoint, no doubt Marston’s and M&B will try to whet investors’ appetite with the upcoming World Cup, which is a usually a boon for pUBS, particularly if England do well.
Markets conditions sticky for Thomas Cook
Interim results from FTSE 250-listed holidays operator Thomas Cook Group PLC (LON:TCG) will be watched for a continuation of the revenue growth seen the first quarter, which rose 7% to £1.7bn.
However, the group still cited “challenging” market conditions in that quarterly update and investors will be wary of signs that it is starting to impact on earnings.
The tougher market conditions have already led to plans by Thomas Cook to close 50 of its high street shops, however, the recovery of its German airline Condor could provide some respite despite sector unpredictability.
In a note on 2 May, analysts at Credit Suisse upgraded Thomas Cook shares to ‘outperform’ from ‘neutral’, citing the firm’s partnership with Expedia and the recovery of Condor as key to a 20% potential upside to its 160p target price for the stock.
Energy business upside for DCC
Ireland-based support services group DCC Group PLC (LON:DCC) – a FTSE 100 outlier - releases its full-year results on Tuesday and analysts at UBS see potential for some ‘small upside’ due to seasonal factors.
But, according to the Swiss bank’s analysts, potentially positive updates on acquisition integration, further acquisitions, and outlook will be more important.
UBS forecasts DCC reporting underlying earnings (EBITDA) of £375.6mln, equating to 313p earnings per share.
The analysts reckon the group’s energy businesses - which deliver liquefied petroleum gas, heating oil and commercial fuels - could be the source of upside thanks to the colder temperatures in February and March.
Expansion moves eyed at C&C Group
Acquisition, expansion and growth will be among the key focus points for another Ireland-based, UK-listed firm - mid-cap alcoholic drinks firm C&C Group PLC (LON:CCR) - as it releases its full-year numbers on Wednesday.
The Bulmers cider and Tennent’s lager maker has, in recent weeks, enhanced its supply chain position with the acquisition of UK based distribution businesses Matthew Clark and Bibendum - which had £1.2bn of gross revenues in 2017.
Last week, it also inked an exclusive distribution partnership with Tsingtao Brewery Company, China’s largest beer firm, which will address the markets in the UK and Ireland.
That adds to the group’s existing partnership brand portfolio with ABInBev which sees the company distributing Stella Artois, Beck’s Vier, Budweiser and Corona in Ireland and Scotland.
At the time of C&C’s interim results, back in October, the company told investors that it had made a “solid start” to the second half albeit it noted competitive pressures in Ireland and volatile consumer conditions.
Average earnings growth could stall
After the Bank of England, as expected, left UK interest rates unchanged at its May policy meeting, the focus remains on when the central bank will next hike borrowing costs, and increases in average pay will be eyed closely.
The standout feature of the March UK labour market report was the softer than expected earnings out-turn, which overshadowed another respectable gain in employment of 55,000 and a drop in the unemployment rate to 4.2%.
With another decent rate of employment gains in the offing this month, analysts at RBC Capital see scope for the unemployment rate to tick down to 4.1%.
For average earnings, they think it appears that the including bonus measure will be unchanged from last month at 2.8% on, but base effects could see the ex-bonus measure slow to 2.6% which would help justify the unchanged BoE policy this month.
Significant events expected:
Monday May 14:
Trading update: Centrica PLC (Q1) (LON:CNA), Dignity PLC (Q1) (LON:DTY)
Interims: Cerillion PLC (LON:CER), Diploma PLC (LON:DPLM), Lonmin PLC (LON:LMI), Victrex PLC (LON:VCT)
Finals: Angling Direct plc (LON:ANG)
Tuesday May 15:
Interims: easyJet PLC (LON:EZJ), CYBG PLC (LON:CYBG), Elegant Hotels Group PLC (LON:EHG), Ei Group PLC (LON:EIG), ITE Group PLC (LON:ITE), Patisserie Holdings PLC (LON:CAKE), Ten Lifestyle Group PLC (LON:TENG)
Finals: Vodafone PLC (LON:VOD), Land Securities PLC (LON:LAND), DCC Plc (LON:DCC), Premier Foods PLC (LON:PFD), BTG PLC (LON:BTG), Animalcare Group PLC (LON:ANCR), Braemar Shipping Services PLC (LON:BMS), Gear4music Holdings PLC (LON:G4M), Sprue Aegis PLC (LON:SPRP)
Trading update: Hargreaves Lansdown PLC (LON:HL.), Spirax-Sarco PLC (LON:SPX)
Economic data: UK employment, average earnings; US retail sales; US housing market index; US business inventories; US Empire State manufacturing index
Wednesday May 16:
Finals: Burberry Group PLC (LON:BRBY), C&C Group PLC (LON:CCR), Speedy Hire Plc (LON:SDY)
Interims: Marston’s plc (LON:MARS), Mitchells & Butlers PLC (LON:MAB), Brewin Dolphin Holdings PLC (LON:BRW), SSP Group PLC (LON:SSPG)
Trading update: Crest Nicholson PLC (LON:CRST), Galliford Try plc (LON:GFRD), Mondi Plc (LON:MNDI (Q1), National Express PLC (LON:NEX), Premier Oil PLC (LON:PMO), STV Group PLC (LON:STV), TI Fluid Systems PLC (LON:TIFS), Charter Court Financial Services Group PLC (LON:CCFS)
Economic data: US housing starts; US industrial production
Thursday May 17:
Finals: Royal Mail Group PLC (LON:RMG), British Land PLC (LON:BLND), Experian PLC (LON:EXPN), National Grid PLC (LON:NG.), Mothercare plc (LON:MTC), 3i Group PLC (LON:III), Sophos Group PLC (LON:SOPH), Wincanton PLC (LON:WIN)
Interims: Thomas Cook PLC (LON:TCG), Countryside Properties PLC (LON:CSP), Euromoney Institutional Investor PLC (LON:ERM), Future PLC (LON:FUTR), Grainger PLC (LON:GRI)
Trading updates: Hill & Smith Holdings PLC (LON:HILS), Just Group PLC (LON:JUST), Regional REIT Limited (LON:RGL)
Ex-dividends: To knock 6.8 points off FTSE 100 index - HSBC PLC (LON:HSBA), Intertek Group PLC (LON:ITRK), Tesco PLC (LON:TSCO)
Economic data: US weekly jobless claims; US Philly Fed business outlook
Friday May 18:
Interims: AstraZeneca PLC (Q1) (LON:AZN)