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Redrow to continue trend of housebuilder results, Melrose grapples with GKN

Thursday will also bring results from cleaning products maker McBride as well as Southeastern rail operator Go-Ahead

Redrow plc - Redrow to continue trend of housebuilder results, Melrose grapples with GKN

On Thursday, we hear from Redrow Group PLC (LON:RDW), which has not provided an update since its half-year numbers in February.

That was one of chairman and founder Steve Morgan’s last acts before he stepped down from his second stint at the group, with the revelation that tough trading at the turn of the year had seen a bounce-back with reservations running at similar levels to the strong market activity last year.

As this was some time ago, investors will be keen to see if that strength has continued with former CEO John Tutte now executive chairman.

For the full year, UBS expects 10.0% volume growth to 6,287 and ASP down 0.7% to £329,900, resulting in 9% revenue growth to £2.1bn.

Estimating margins have tightened slightly, operating profit is seen coming in at £408mln for EPS to be up 7% to 91p.

“We expect long-term guidance beyond FY19 and more granularity into FY20/21 targets. For FY20E, we expect revenues of £2.2bn, PBT of £411m and EPS of 97p.”

Melrose may look to reassure as it continues grappling with GKN

Almost a year and a half after winning the bitter battle to buy engineer GKN but with disquiet still ringing in its ears, Melrose Industries PLC (LON:MRO) will post half-year results on Thursday.

Last year a £629mln write-down of poorly performing contracts that came with GKN resulted in a big loss, while this year the group has been accused of breaking pledges made during the hostile takeover process after announcing it was now planning to close down a civil aircraft parts factory in Birmingham.

MPs and unions voiced concerns about asset-stripping and UK operations being run down that were difficult to reconcile with earlier commitments directors had made about GKN.

Potential GKN disposals of Ergotron and Powder Metallurgy were abandoned last year, making the turnaround is not quite going exactly to plan.

In May, with the board also the being criticised by investor groups over executive pay, the turnaround specialist assured that trading so far this year had been in line with management expectations.

One of that management group, co-founder David Roper, has decided to step down, while the annual shareholder meeting saw 23% of votes were against the boardroom pay policy.

For the interims, analysts at RBC Capital Markets expect the “in line” message to continue, while there will be “a bit of leeway” in their outlook comments.

RBC forecast group sales for the half of £6.1bn, as auto sales down 6% in the half but aerospace a “continued buffer”, with underlying earnings at £500mln and headline earnings per share at 6.2p as cost savings support margins.

“We continue to see Melrose as an attractive self-help story and believe that markets worries around automotive risks are overdone creating a highly attractive valuation.”

Can McBride clean itself up?

With three profit warnings already this year, shares in McBride plc (LON:MCB) are down around three-quarters from their level at the start of 2018.

The maker of own-brand cleaning products for supermarkets said in July that full-year results, which will be published this Thursday, will be “broadly in line” with earlier guidance despite “marginally weaker than expected” performance in the second half.

With sales particularly poor in the UK and France, the group warned that weaker demand across “a number of markets” would also mean the new financial year would fare no better.

Together with the major loss of customers after last year’s price hikes the company was forced to make in a highly competitive retail market across Europe, analysts said the lower rate of demand suggested that higher promotional intensity from branded players, is drawing consumers away from private label.

Broker Liberum even said that private label businesses such as McBride “seem to not be very suited for public listings” as external factors such as commodity costs, logistics costs, tough customers “are often not best played out in the public glare”.

But as McBride remains market leader in private label in Europe, a takeout strategy might not work either.

Go-Ahead looks to stay on track

Also on Thursday, transport operator Go-Ahead Group PLC (LON:GOG) reports its full-year results, which may include some info on forecasts following the latest extension to its Southeastern rail franchise to 1 April 2020.

The franchise was initially meant to expire on 22 June this year, so investors may be looking to see if any more money can be squeezed out of passengers while the company retains the rights.

Numbers-wise, the firm posted a 4% rise in like-for-like revenues from 1 July 2018 to 27 April 2019, so shareholders will likely be hoping that the summer months coupled with a weak pound have caused UK holidaymakers to take a ‘staycation’ and use Go-Ahead’s services to reach UK vacation spots.

Southeastern may be particularly critical given the group’s other franchise, Govia Thameslink, is not expected to contribute to profits this year.

The group will also be hoping for a continued strong performance from its London and international buses after upgrading its full-year expectations for the business in June.

US macro data provides trans-Atlantic flavour

Following the delivery of UK PMI’s earlier in the week, Thursday will bring news from across the pond as the US reports its services PMI alongside unemployment figures and factory orders.

This data may give traders a little bit of clarity on what will be coming on Friday, when the US reports its all-important non-farm payroll numbers.

Major announcements due for Thursday September 5:

Finals: Alumasc Group Plc (LON:ALU), Beeks Financial Cloud PLC (LON:BKS), Genus PLC (LON:GNS), Go-ahead PLC (LON:GOG), McBride plc (LON:MCB), Redrow plc (LON:RDW)

Interims: Curtis Banks PLC (LON:CBP), Enquest PLC (LON:ENQ), Gem Diamonds PLC (LON:GEMD), Melrose PLC (LON:MRO), Mpac Group PLC (LON:MPAC), Pphe Hotel Group PLC (LON:PPH)

Trading announcements: Dixons Carphone Plc (LON:DC.)

FTSE 100 ex-dividends: BHP Group PLC (LON:BHP), Admiral Group PLC (LON:ADM), CRH PLC (LON:CRH), Flutter Entertainment PLC (LON:FLTR), Micro Focus International PLC (LON:MCRO), RSA Insurance PLC (LON:RSA), Land Securities PLC (LON:LAND), Glencore PLC (LON:GLEN)

Economic data: US weekly jobless claims, ADP US employment change, Markit US services PMI, US factory and durable goods orders, ISM US non-manufacturing composite

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