Brexit fallout to overshadow Barratt and Dunelm results on Wednesday

Barratt will report a rise in profits while a special dividend is possibly o the cards at Dunelm, but company news will play second fiddle to Brexit once again on Wednesday

Barratt Developments - Brexit fallout to overshadow Barratt and Dunelm results on Wednesday
Will the UK leave the EU without a deal next month, or will the exit date be pushed back again?

Barratt Developments PLC (LON:BDEV) will be the first of a trio of housebuilders to release results this week when it pushes out its full-year numbers on Wednesday.

The FTSE 100 group has already provided guidance for its 2019 financial results so there should not be too many surprises.

In a trading update for the year ended June 30, the company said it completed a total 17,856 homes, compared to 17,579 last year. The company expects total pre-tax profit for the year of £910mln, up from £835.5mln in 2018.

Given that the outline of results for 2019 is already known, the focus will be on the housebuilder’s trading since year-end and its forecasts for the new fiscal year.

“We expect sales per site per week over July/August to be broadly flat year on year and thus the stable trend of the first half of 2019 to be prolonged,” analysts at UBS said.

For the new financial year, they expect 3.1% volume growth excluding joint ventures, with average selling prices (ASP) up 0.2% allowing operating margins to expand 20 basis points to 19.0%, which all results in pre-tax profit rising to £929mln from £910mln.

Special divi for Dunelm shareholders?

Homeware retailer Dunelm Group PLC (LON:DNLM) is another due to report its full-year results on Wednesday and, like Barratt, few surprises are expected after management recently repeated its view that profits will grow by around 20% this year to between £124-126mln.

Instead, investors should be looking for any news on a potential special dividend, which City broker Peel Hunt thinks will definitely come later this year, and could possibly be announced alongside the full-year numbers.

“The only question is timing; without Brexit uncertainty, we would have been betting on an autumn announcement, maybe even with the final results, although given that uncertainty, management may decide to hold fire for now,” analysts said in a note to clients.

As ever, guidance will also be key, especially given that Dunelm will face a sterner test in the year ahead as the comparatives get stronger.

Brexit, Brexit, Brexit…

Of course, company news is likely to take a back seat on Wednesday given that a general election could be announced at any moment.

On Tuesday night, MPs will vote on whether or not to stop the possibility a no-deal Brexit.

Prime minister Boris Johnson has warned his party to fall in line and vote against the bill or face being effectively kicked out of the Conservative party.

But a number of Tory MPs are reportedly set to go against Johnson, and Jeremy Corbyn and his Labour colleagues would likely follow suit.

Analyst Neil Wilson at Markets.com thinks it is “very likely” that the rebels will win that vote. Should that happen, the PM is widely expected to call for a snap election on 14 October, a move which would require the support of two-thirds of parliament.

There are conflicting reports as to whether a general election would get the backing of MPs, though.

Leader of the opposition, Jeremy Corbyn, has said once again that he would be ready “to take the fight to the Tories”, but others in the Labour party are said to be against a general election before 31 October, when the UK is due to leave the EU.

In terms of Tuesday's timeline, here’s what to look out for:

After 5pm: After the PM has made a statement on his return from the summer recess, an MP is expected to make a three-minute application to the Speaker for an emergency debate on Brexit

6-9pm: If approved, which it almost certainly would be, the emergency debate can last for up to three hours

9-10pm: MPs will vote on whether to take control of parliament to extend the Brexit deadline to at least the end of January. The vote could be as late as 10pm.

Significant events expected on Wednesday September 4:

Finals: Barratt Developments PLC (LON:BDEV), Dunelm Group PLC (LON:DNLM), Frontier Developments PLC (LON:FDEV)

Interims: Inspired Energy plc (LON:INSE), Just Group PLC (LON:JUST), Oxford Biomedica PLC (LON:OXB)

Trading update: Halfords Group PLC (LON:HFD)

Economic data: Caixin China PMI composite, Markit UK services PMI, MBA US weekly mortgage applications

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