It’s hard to know if it will be an easy day ahead for EasyJet PLC (LON:EZJ) as it touches down with a pre-close update on Tuesday, as recent forecasts have been mixed and come as the wider travel industry outlook remains turbulent over Thomas Cook’s collapse.
The budget airline reported a record £275mln loss for its first half, back in May, but analysts reckon it could be on course for a record profit in the second half.
Even so, full-year earnings will still be well below 2018’s number, as higher costs offset a surge in sales.
Non-fuel costs will be a key area of focus for investors following a 4% drop in the third quarter, while the impact of a spike in oil prices in September following a military strike on Saudi Arabian oil fields will also be eyed.
Analysts at UBS expect the airline to confirm its full-year profit guidance of between £400-440mln.
Economics lessons with Electrocomponents
We will also hear from industrial and electronic products distributor Electrocomponents PLC (LON:ECM), which is expected to report a continuing softening in sales growth during the second quarter.
The first three months of its financial year saw like-for-like (LFL) revenue growth weakening to 4% from 8% in the previous quarter due to softer electronics performance, offset by stronger numbers in industrial.
Management acknowledged the more uncertain external macroeconomic environment may weigh on the second quarter but felt the group was well positioned to deliver progress in the year.
UBS expects LFL growth from the FTSE 250-listed group will slow to 3% between July and September, although the Swiss bank expects numbers to pick up from the second half onwards.
Electrocomponents predicted broadly stable gross margins for the full year, with the first half likely to be impacted by efforts to diversify the portfolio by investing into broader electronics offerings.
Investors will focus on commentary around the market environment in the trading statement, which may also include comments on the financial year outlook against general consensus.
Higher or fire for recruiter
The third-quarter trading update from Robert Walters PLC (LON:RWA) will show whether the FTSE 250 recruiter is working hard, or hardly working.
The last time we heard, the firm was complaining that UK employers were holding off hiring more staff due to Brexit uncertainty, with profits dipping 8% to £25.2mln in the second quarter.
Analysts at AJ Bell said the trading statement should make for interesting reading at a time when low jobless rates appear to be stoking some wage growth.
“The danger is that unemployment is a lagging indicator, owing to the lead times involved in firms feeling confident enough to hire and then the process of finding the best candidate.”
Investors will also be looking at the split between permanent and temporary hires after Robert Walters reported in the second quarter that fees from temporary hires rose faster than those from permanent ones for the first time since 2017.
“Generally the more confident employers are the more likely they are to take on full-time staff, while they may favour temps if the outlook is a bit less certain,” they said.
Fellow recruiter PageGroup PLC (LON:PAGE) is releasing its third quarter update on Wednesday.
Macro fuel for the markets
Ears open for two speeches on both sides of the Atlantic, with Bank of England’s governor Mark Carney speaking in Tokyo at the Climate-related Financial Disclosure Summit, and US Federal Reserve chair Jerome H. Powell discussing data dependence in Colorado.
The text on Carney’s speech will be released at 5:10am in the morning, UK time.
The British Retail Consortium had scheduled to release statistics on the UK industry ready for reading on Tuesday morning, but the documents were accidentally published a day early.
Significant announcements expected for Tuesday 8 October:
Finals: YouGov PLC (LON:YOU)
Interims: Air Partner PLC (LON:AIR)
Trading statement: EasyJet PLC (LON:EZJ), Electrocomponents PLC (LON:ECM), Hollywood Bowl Group PLC (LON:BOWL), Robert Walters PLC (LON:RWA)
Economic data: US producer prices, US NFIB small business optimism, Powell speaks again