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Impressive first quarter performance needed from oil giant BP after recent share price rally

Last updated: 06:00 30 Apr 2019 BST, First published: 12:35 29 Apr 2019 BST

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BP PLC (LON:BP.) will kick off the energy sector’s first-quarter reporting season on Tuesday, although the blue-chip oiler’s numbers will need to be mightily impressive to get investors any more excited, given that the shares have been particularly strong in recent weeks.

Indeed, BP’s outperformance was the reason given by RBC Capital when the group dropped off the bank’s ‘top stocks’ list earlier in April.

“We remain constructive on BP for its medium term growth profile and improving cash flow framework. However, the shares have performed well versus the sector in recent months, and we see less valuation upside now,” the Canadian bank’s analysts said in a note.

Meanwhile, in a recent note, Deutsche Bank highlighted that BP’s first quarter volume growth should show some progress, helped by new project start-ups.

But the German bank still expects the oil major to report a 1% decline in replacement cost pre-tax profit to US$4.178bn.

Provisions for Iran fines to cloud StanChart numbers

First quarter numbers from Standard Chartered PLC’s (LON:STAN), meanwhile, will be clouded by another big provision for fines over global misdemeanours, and by fears more could be coming.

Earlier this month, the emerging markets-focused lender was fined US$1.1bn by US and UK authorities for breaching US sanctions against Iran.

The FTSE 100-listed bank said it accepted “full responsibility” for processing hundreds of millions of dollars’ worth of transactions for Iran-controlled entities between 2008 and 2014, despite there being a ban on doing so.

Standard Chartered said it would have to set aside another US$190mln in the first quarter of 2019 after taking a US$900mln provision to cover the cost at the end of last year.

The settlement with the US Department of Justice, the Financial Conduct Authority and several other agencies draws a line under a five-year long investigation and should allow investors to focus more on the lender’s underlying performance as starts to cut costs and exit smaller business as part of a new three-year strategy overhaul announced in February.

However, weekend press reports suggested the banking giant could face a new £1.5bn fine for breaking US sanctions against Iran after a civil case was filed by whistleblowers.

Life after coffee moment for Whitbread

Whitbread plc (LON:WTB) will announce its first annual results since selling its Costa Coffee chain to Coca-Cola for £3.9bn cash, which was announced last summer and completed in early January.

City analysts are, on average, forecasting revenue of £2.09bn, underlying profit before tax (PBT) of £477m and EPS of 204.6p.

A year ago, with Costa still included, the group reported underlying PBT of £591mln.

Whitbread boss Alison Britain has already set out plans for the company to use the Costa cash to buy back £2.5bn worth of shares.

The latest results should contain recent developments in Britain’s plans to double Premier Inn’s hotel network to more than 170,000 rooms around the world, with a focus on the UK and the newer market of Germany, where currently it has only one hotel.

Looking to the next couple of years, “Germany is an exciting hotel opportunity,” Morgan Stanley analysts have said, with higher revenue and profit per room than the UK, but they reduced estimates for fourth-quarter revenue per available room (revpar) for this last year to -3%.

Greene King CEO hopes to end on a high

The outgoing chief executive of FTSE 250-listed pubs operator Greene King PLC (LON:GNK), Rooney Anand, will be hoping to call ‘Cheers’ in its pre-close trading update on Tuesday as it falls on his last day as boss after almost 14 years at the helm.

His replacement, Nick Mackenzie, who joins Greene King from theme park operator Merlin Entertainments PLC (LON:MERL), will start his new job on 1 May.

Numbers-wise, the group will likely be hoping for a boost from its strong trading over the Christmas and New Year period, when like-for-like (LFL) sales jumped by 10.9% over the two holiday weeks.

In a recent note, analysts at Greene King’s ‘house’ broker Peel Hunt noted that the group’s LFL sales has risen by 3.2% in the first 36 weeks of the year and were expected to have “remained strong subsequently” despite “ongoing political-economic uncertainty and weak confidence”.

The analysts added that they expect forecasts to be “at least held” in Greene King’s update.

Significant events expected on Tuesday:

Trading update: BP PLC (Q1) (LON:BP.), Standard Chartered PLC (LON:STAN), Greene King PLC LON:GNK), Essentra PLC (LON:ESNT), St James’s Place Capital PLC (LON:SJT), Jupiter Fund Management PLC (LON:JUP), Weir PLC (LON:WEIR), Elementis PLC (LON:ELM), Glencore PLC (LON:GLEN), Hochschild Mining PLC (LON:HOCH), PPHE Hotel Group Ltd. (LON:PPH)

Finals: Whitbread plc (LON:WTB); Animalcare Group PLC (LON:ANCR), Atlas Mara Limited (LON:ATMA), Dillstone Group PLC (LON:DSG), Inspiration Healthcare Group PLC (LON:IHC), Proteome Sciences PLC (LON:PRM), Xeros Technology Group PLC (LON:XSG)

Interims: C4X Discovery Holdings plc (LON:C4XD), Image Scan Holdings Plc (LON:IGE)

Economic data: Nationwide UK house price index; UK consumer confidence; US pending home sales; US Case-Schiller home price index; US Chicago PMI

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