Summer is coming to an end and Monday will be the last bank holiday until Christmas but there are plenty of things to look forward to on the financial calendar.
The Restaurant Group PLC (LON:RTN), which publishes its interims on Friday, will most likely be glad that the recent heatwave is over since it meant many people spent more time in the beer garden than at restaurants.
First-half results from oilfield services firms Petrofac (LON:PFC) and Hunting Plc (LON:HTG) may have received a boost from the recent recovery in oil price while a tough retail market has been less kind to the performance of high street stores owned by WH Smith (LON:SMWH), which will release a trading update on Thursday.
The four day week ahead will also see interims from Bunzl PLC (LON:BNZL) and Churchill China PLC (LON:CHH) along with full-year results from Hays plc (LON:HAS) and a trading update from Diploma PLC (LON:DPLM).
World Cup and heatwave hits Restaurant Group
For years, the Restaurant Group was one of the more sure-footed restaurateurs but it started to go pear-shaped in 2016.
The Frankie & Benny’s owner has been freshening up the offering and trying to reconnect with the customers since then and while May’s update continued to show like-for-like sales falling year-on-year, the rate of decline was slowing.
The company also reassured the market that full-year results would be in line with market expectations.
Like-for-like sales in the 20 weeks to May 20 fell 4.3% and total sales dropped 3.1% as heavy snowfall kept customers away. Excluding the impact of adverse weather, like-for-like sales were still down 3.1%.
Since then, the group has had to cope with the rival attraction of the World Cup – usually a boon for pubs but not for restaurants – and the recent heatwave.
Management has been growing the Pubs and Concessions business so there might be some good news on that front but in the absence of any magical new restaurant formula, the focus is likely to remain on cost-cutting initiatives.
WH Smith travel business to drive growth
It is better to travel than to arrive, so it is said, and retailer WH Smith has taken this old adage to heart.
Thursday’s trading update, covering the final quarter of WH Smith’s fiscal year, is once again expected to show that the newspapers and books seller’s shops in travel hubs are doing well while the rump of the High Street estate is slowly crumbling.
The investment being pulled from the High Street has been redirected to its outlets at service stations, airports and the like.
The number of travellers is rising, whereas the number of people trudging around shopping centres is declining, so it is small wonder WH Smith is planning on opening between 15 and 20 new ‘travel’ sites in the UK this year.
Investors will be looking for signs that the travel side of the business is still thriving, including the nascent overseas business.
“Q4 is peak season for Travel and we expect strong revenue trends in Q4, helped by new space additions,” said RBC Capital Markets.
“We expect High Street footfall to remain under pressure but WH Smith should see gross margin upside from mix to higher margin areas like fashion stationery, and further rental and technology-related cost savings. High Street’s profit outcome each year will partly depend on the new product and books publishing pipeline, which has been softer in the past year compared to FY16/17. Encouragingly for WH Smith, higher margin Stationery LFL [like-for-like] sales have grown every year on the High Street in the last three years,” the broker noted.
Hays sees profits beating forecasts
Ahead of its full-year results on Thursday, Hays has said it expects operating profit to be “marginally ahead” of market forecasts of £240.9mln and that it is considering increasing shareholder returns.
In a final quarter trading update in July, the recruitment firm said its strong cash position and underlying trading would “enable the board to consider increasing shareholder returns significantly, in line with our dividend policy”.
A strong performance in the German jobs market has been the key driver of growth in net fees, a measure of recruiters’ gross profit. The company also saw an improvement in the UK and Ireland division in the fourth quarter despite weaker business confidence due to Brexit uncertainty.
Investors will be keen to see whether Hays has seen a further recovery in the UK and what the company’s outlook is for its markets.
Petrofac sales, cash flow and debt reduction in focus
When Petrofac reports the spotlight will likely be on sales, cash flow and debt reduction.
The fact that better oil prices mean better business for oil services providers is pretty obvious, and, plainly sentiments around the sector are more positive than in recent years - nonetheless, having been so far on the back foot in the wake of the slowdown in recent years they have catching up to do.
Amid the sector recovery expectations, internal and external, are now somewhat higher in terms of contract wins and the work pipeline and the focus is also on the firm’s indebtedness.
Friday’s US$292mln deal to sell out of the Greater Stella development in the North Sea represented what chief executive Ayman Asfari described as “a further milestone in the journey back to a capital-light business.”
US investment bank Jefferies last week downgraded Petrofac, reducing to ‘hold’ from ‘buy’, amid caution over the pace of major contract wins.
Analyst Mark Wilson, in a note, highlighted that Petrofac’s new bank facility and the Mexico sell-down alleviates balance sheet fears, as a bond matures this October, however, new business is needed. “What remains is to deliver the $3.5bn of new Lump-Sum E&C awards we see as a minimum during 2018,” the analyst said.
Wilson reckons it is “more than possible” for Petrofac to achieve the contract wins, with US$1.8bn so far landed in the year-to-date, though he cautions that no “true anchor” project (US$1bn or more for any single project) has been secured – albeit, he notes company guidance that major contracts could come at in late Q3 or Q4.
Adding to the uncertainty, the analyst added: “The unknown headline risk that also means we choose to exercise price target discipline and move to hold is the ongoing SFO investigation.
Investors eye performance of Hunting’s Titan unit
Given the recent deal activity and apparent renewal of big investment into America’s Permian shale basin (a number of big money acquisitions saw billions of dollars change hands), there’s likely to be a higher degree of interest on Hunting Plc’s results.
Hunting’s Titan business unit, acquired six years ago, is a well-positioned beneficiary of the sort of investments being targeted in US shale generally and the Permian basin specifically.
“Titan is already back to peak 2014 levels even with a rig count ~50% lower and pricing not back to peak. In-sourcing & automation could support margin upside,” analysts at Exane said in a June note.
“Even after strong upward revisions to consensus this year, we still see upside to estimates (Q1EBITDA of USD35m was above ~USD130m consensus run-rate; Exane at USD159m) as activity improves in a variety of end markets.”
Plainly, Titan’s performance will be a key highlight of Thursday’s interim results.
Acquisitions to boost Bunzl revenue
Bunzl spent a record amount on buying up businesses last year and the group has indicated that it would look at further acquisitions to expand the business.
The distribution and outsourcing company, which reports its first-half results on Tuesday, said in its last trading update that growth through acquisitions remains part of its strategy with a total committed spend so far this year of about £105mln.
“The pipeline for acquisitions remains active and, with ongoing discussions taking place, the Company expects to complete further transactions during the remainder of the year,” Bunzl said.
It also said it expects revenue in the first half to rise 11% at constant exchange rates, boosted by its recent acquisitions and additional grocery business won in North America. Overall trading was in line with expectations, the company added.
Analysts expect first-half earnings to rise 7.3% to 59.1p per share and revenue to rise by 4.3% to £4.3bn on a reported basis.
Churchill China investors look forward to healthy interims after bullish update
Investors will be expecting good news from Churchill China when it releases its interims on Thursday after a bullish trading update in July.
The Stoke-on-Trent pottery maker (whose most famous product is perhaps the plates used by pub chain JD Wetherspoon) reported better than expected growth levels in its European market during the first six months following investment and product developments led the firm to upgrade its expectations for the full year.
Diploma eyed for more acquisition news
Investors in FTSE 250 technical products maker Diploma will have acquisitions on their minds when the firm provides a trading update on Wednesday.
The announcement comes hot on the heels of the firm’s acquisition of cabling company FS Cable on 22 August, with chief executive Richard Ingram saying in Diploma’s half-year results in May that the group planned to make several purchases before the end of the year.
As FS Cable is the first acquisition to be announced so far since the interims, any inkling of another impending acquisition will turn heads.
Significant announcements due:
Monday, August 27:
UK BANK HOLIDAY
Tuesday, August 28:
Interims: Bunzl PLC (LON:BNZL)
Finals: Sylvania Platinum Ltd (LON:SLP)
Economic data: CBI UK service sector survey; US import, export prices
Wednesday, August 29:
Interims: Petrofac PLC (LON:PFC), IQE plc (LON:IQE), The Gym Group (LON:GYM)
Trading update: Diploma PLC (LON:DLPM)
Economic data: Nationwide UK house prices; US retail sales; US industrial production; Empire State manufacturing survey
Thursday, August 30:
Trading update: WH Smith Plc (LON:SMWH)
Interims: Churchill China PLC (LON:CHH), Hunting Plc (LON:HTG), Amigo Holdings PLC (Q1) (LON:AMGO), AFI Development PLC (LON:AFRB), Arrow Global Group PLC (LON:ARW), ASA International Group PLC (LON:ASAI), Eddie Stobart Logistics PLC (LON:ESL), Chesnara Plc (LON:CSN)
Ex-dividends to clip 0.6 points off FTSE 100 index: InterContinental Hotels Group PLC (LON:IHG), St James’s Place PLC (LON:STJ)
Economic data: UK consumer credit, money supply numbers; US weekly jobless; US housing starts; Philly Fed business outlook survey
Friday, August 31:
Interims: Restaurant Group PLC (LON:RTN), EMIS Group PLC (LON:EMIS), BBGI SA (LON:BBGI)
AGM: Stagecoach Group PLC (LON:SGC)
Economic data: US leading indicators; University of Michigan final consumer sentiment survey