The hot weather this summer is expected to have dragged on customer demand for FTSE 250-listed tour operator Thomas Cook Group Plc (LON:TCG) this year.
The company, which reports its 2018 results on Thursday, cut its profit outlook for the year in a September trading update.
The group said that, based on recent trading, its core underlying earnings (EBIT) would come in at around £280mln for the 12 months to September 30, below a previous £323mln-£355mln range.
It blamed the reduced profit guidance on the heatwave in northern Europe over the summer, which meant more people stayed at home and put off booking their holidays abroad. As a result, it experienced tougher competition and higher-than-usual levels of discounting in the later part of the summer season in August and September.
“After two profit warnings we believe TC may be in a position to announce further cost cuts going forward,” UBS said.
“We argue this would be a good opportunity to close down some of the legacy high-street shops in the UK. For FY19 we expect tour operator capacity to be cut also, reflecting in our opinion the high levels of competition in the market.”
UBS expects Thomas Cook to post EBIT of £289mln for the year, versus the consensus forecast of £311mln. The investment bank said it expects investors to focus on winter and summer schedules, whether the company's airlines can pass through higher fuel costs, free cash flow generation, potential mid-term financial guidance and any contingency plans for the event of a hard Brexit.
Go Ahead looks to leave rail issues in the past
Trains and buses operator Go-Ahead Group PLC (LON:GOG) somehow managed to post a rise in profits when it published its full-year results back in September.
A calamitous timetable overhaul led to hundreds of trains being cancelled, but a strong performance from its London buses and a handful of disposals helped profits to rise by 6.5%.
Still, there are a number of challenges facing the bus business outside of London and there is still some uncertainty on the eventual fallout from the recent operational disasters within the Govia Thameslink rail division.
Despite the headwinds, boss David Brown said in the full-year results that he expects a “robust performance” this time around, so investors will be looking for evidence of that in Thursday’s trading update.
Post-World Cup trading eyed at Greene King
Hot weather and the World Cup boosted Greene King PLC’s (LON:GNK) performance over the summer, but investors will be keen to see how it fared without those handy tailwinds when the pubs group reports its half-year results on Thursday.
Long-serving CEO Rooney Anand recently announced he’s stepping down, so a big change is on the cards at a time when the pub industry is facing numerous headwinds.
Business rates and staff costs are soaring, while pubs with a larger focus on food, like Greene King has, are battling an intensively competitive and oversupplied casual dining market.
Plans to offset gross cost inflation of around £45mln-£50mln were on track in the first quarter, and we’ll be looking to make sure that’s still the case.
To try to keep margins respectable, Greene King is trying to cut around £50mln from its cost base, savings it was on track to make in the first quarter. The market will be looking to see if this is still the case.
Thursday November 29:
Trading update: Go-Ahead Group PLC (LON:GOG)
Finals: Thomas Cook PLC (LON:TCG), Daily Mail & General Trust PLC (LON:DMGT), Britvic Plc (LONLBVIC), Character Group PLC (LON:CCT), Premier Asset Management Group PLC (LON:PAM), Urban & Civic PLC (LON:UANC), Tharisa plc (LON:THS)
Interims: Greene King PLC (LON:GNK), BCA Marketplace PLC (LON:BCA), Paypoint PLC (LON:PAY), Motorpoint Group PLC (LON:MOTR), James Latham PLC (LON:LTHM), LXI REIT (LON:LXI), Schollium Group PLC (LON:SCHO), XPS Pensions Group PLC (LON:XPS), Great Eastern Energy Corp Ltd. (LON:GEEC)
AGMS: ASOS plc (LON:ASC), Ironridge Resources Limited (LON:IRR)
Ex-dividends to clip 1.56 points off FTSE 100 index: International Consolidated Airlines Group PLC (LON:IAG), Johnson Matthey PLC (LON:JMAT), Land Securities PLC (LON:LAND), Severn Trent PLC (LON:SVT)
Economic data: US weekly jobless claims; US personal income, spending; US pending home sales