First big wave of corporate results to hit on Thursday: BT, Unilever, Shell, Diageo to stand out

Aside from the tide of blue-chip results, some big second line news will also flow on Thursday from the likes of Britvic, Dairy Crest, Premier Oil, Rank Group, and Renishaw

Big wave
The main event should be on BT Group’s third-quarter update on Thursday, which is expected to bring weaker earnings and revenue

With the latest Federal Reserve policy decision out of the way on Wednesday night, and the January US jobs report not due until Friday, the focus on Thursday will be squarely on a big batch of UK corporate news from the likes of BT Group PLC, Unilever plc (LON:ULVR), Royal Dutch Shell PLC (LON:RDSA) and Diageo plc (LON:DGE).

The main event should be on BT Group’s third-quarter update on Thursday, which is expected to bring weaker earnings and revenue as its new boss picks up from where Gavin Patterson left off.

Before standing down as chief executive and handing over the reins to former Worldpay boss Philip Janson, Patterson unveiled his strategy to improve BT’s performance.

That included axing 13,000 jobs and launching new consumer packages that combine broadband, mobile and pay-TV as a single service and bill.

He also merged BT’s business and public sector divisions with the wholesale and ventures arm to create BT Enterprise in a bid to streamline operations.

Deutsche Bank expects to see evidence that Patterson’s strategy is starting to bear fruit in the third quarter results.

The German bank expects the company to post a 6% year-on-year decline in earnings (EBITDA) to £1.8bn and a 1.7% decrease in revenue to £5.9bn in the third quarter, which is 0.6% above and 0.1% below company compiled consensus estimates, respectively.

The German investment bank said steps taken to lower BT’s cost base, including job cuts, closing the final salary pension scheme and moving out of the London headquarters in St Paul’s, offer a “silver lining of sorts from recent turmoil”.

Its biggest concern is how new boss Jansen grasps BT’s roll-out of superfast fibre broadband to homes and businesses, given the costs involved and competition it faces from rivals doing the same thing such as Talktalk Telecom Group (LON:TALK) and Vodafone Group PLC (LON:VOD).

First look at Unilever’s new boss

It’s also a new dawn over at Unilever, with Alan Jope taking over the reins as CEO from Paul Polman, who stepped down earlier this month following an unsuccessful bid to relocate the consumer goods giant to the Netherlands.

Despite shareholder uproar over the plans to move, Jope is taking over a well-groomed beast: a sticky customer base and improved margins mean Unilever is in good shape.

The new boss has already committed to the targets for sales growth and profit margin improvement set by his predecessor, so expect to see 3-5% growth in underlying sales in Thursday’s fourth-quarter update.

Third-quarter figures back in October showed some recovery in sales, while last month Unilever made a big move into the Asian market with the acquisition of GSK’s consumer nutrition business.

The move boosts Unilever’s footprint in India, and while it might be too early for details, any plans for the business are worth paying attention to.

Diageo set for Chinese slowdown

Analysts also expect a “solid” performance from drinks giant Diageo when it publishes half-year numbers, also on Thursday.

The Smirnoff and Baileys owner has seen revenues and profits rise of late as improving sales trends in higher-risk emerging markets and higher selling prices have worked their magic.

Diageo’s North American business takes care of itself, but there will be a particular focus on the group’s performance in Asia, especially in China where the economy has started to stutter.

Any comments on India, which is as important as any market for the company, will also be of interest given that the company has taken full control of United Spirits.

Overall, investors will be keen to see if the company hits its target of mid-single digit organic net sales growth, while they will also want to see if the hefty cost-saving plan is starting to bear fruit.

Oil price wobble to hit Shell

Easy paydays are over for the integrated oil majors, according to analysts at Deutsche Bank, so Royal Dutch Shell’s fourth-quarter update on Thursday is likely to paint a dull picture.

“Sharp commodity declines combined with a challenging downstream means the strong earnings and cash momentum apparent for much of the past two years should end this quarter,” said DB analyst Lucas Herrmann in a sector preview note.

However, the analyst added: “The scope for material working capital and derivative cash release at Shell may also calm emerging nerves on a seeming lack of 2019 flexibility.”

Separately, the Share Centre previewed Shell’s update saying: “The oil major has been reporting great numbers as average oil prices made steady progress since the lows of 2016.

“However, given the anticipation of higher supplies from shale and Iranian oil supplies not expecting to fall back as dramatically as previously expected, oil prices during the final quarter wobbled which will no doubt hit Shell's numbers.

“Investors though will still expect solid free cash flows and hope that gearing level shave down a little further.”

Significant announcements expected on Thursday:

Trading updates: BT Group PLC (LON:BT.A), Royal Dutch Shell PLC (LON:RDSA), Britvic Plc (LON:BVIC), Dairy Crest PLC (LON:DCG), Evraz plc (LON:EVR), Polymetal International PLC (LON:POLY), 3i Group PLC (LON:III), IQE plc (LON:IQE), DiscoverIE PLC (LON:DSCV), Ergomed PLC (LON:ERGO), Gattaca Plc (LON:GATC), PPHE Hotel Group PLC (LON:PPH)

Finals: Unilever PLC (LON:ULVR), Primary Health Properties PLC (LON:PHP), Premier Oil PLC (LON:PMO), Redhall Group PLC (LON:RHL), Infrastrata PLC (LON:INFA)

Interims: Diageo PLC (LON:DGE), Renishaw PLC (LON:RSW), Rank Group PLC (LON:RNK), ANGLE PLC (LON:AGL), Alumasc Group PLC (LON:ALU)

FTSE 100 ex-dividends: None

Economic data: UK international trade in services data; CBI quarterly industrial trends survey; US weekly jobless claims; US Challenger job cuts; US personal income, consumption

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