British American Tobacco provides update as political smoke clears

On The Beach will show how it is doing at grabbing market share since Thomas Cook’s demise


Companies including British American Tobacco, Marston’s and On The Beach are in the diary for Wednesday, while the political agenda includes more election campaigning and late in the evening the results of a highly anticipated poll. 

At 10pm, the first seat-by-seat forecast by YouGov will be published, using the same multilevel regression with post-stratification (MRP) model that forecast a hung parliament in 2017.

This could see a big swing for the pound if there are any surprises.

British American Tobacco PLC (LON:BATS) has received some bruises from political shifts Stateside in the last few years but received a boost from that direction in the past week.

Potential tighter nicotine regulations were put on the back burner by the US Food and Drug Administration, which analysts said should provide one area of respite for the sector from regulatory pressures, with BAT shares sent higher on the news.

In September, while rival Imperial Brands issued a profit warning, new BAT chief executive Jack Bowles unveiled a plan to streamline management and cut around 2,300 jobs as part of a turnaround plan that includes a target of generating US$5bn in sales from new category products such as vaping.

Current full-year forecasts are targeting sales growth of 3-5% for 2019, as well as any reduction in the firm’s US$50.3bn debt pile that may provide more room for dividend payments.

After fast-growing vaping rival JUUL halted sales of its mint flavoured e-cigarette earlier this month, analysts at Liberum said it was a positive for the UK tobacco giants and "as the vapour category becomes less vibrant, we believe there is material scope for tobacco volume declines to improve and for BAT and IMB to win back share of the nicotine category with their own products".

On The Beach looks to surf Thomas Cook wave

On The Beach PLC (LON:OTB) will show in Wednesday’s full-year results how it is doing at grabbing market share since sector-mate Thomas Cook’s demise in August.

In October, the online package holiday seller gave a sunny outlook for the year ahead, saying it now had “an unprecedented opportunity to take additional market share at an increased rate”, having started to ramp up its marketing investment in its luxury holiday portfolio and its websites.

Others in the sector recently reported beating market expectations but OTB has already announced that trading remained in line with August’s scaled-back expectations because of the weakening of sterling against the euro.

It’s also worth remembering that the short-term downside from Thomas Cook’s liquidation, which landed On The Beach with immediate holiday cancellations since it relied on the travel firm’s aircraft for 15% of its overall flight capacity, might still eat into the yearly figures.

“We do not expect detailed guidance on the prospects for the current year; only circa 15% of annual bookings are made before January,” noted broker Peel Hunt, instead expecting updates early stages of Classic Package and its relationships with travel agents, as well as long haul and international business.

Marston’s beer sales may be diluted by rain

On Wednesday, Marston's PLC (LON:MARS) is publishing final results which should not surprise investors following the detailed trading update published last month.

Some growth in Christmas bookings could be served up, as well as news on plans to reduce debt by £55mln annually.

Like-for-like sales may be held back by October’s cold, wet weather and ongoing weakness of the eating out market, considering half of its pub profits are from food-led venues.

“We expect the wet-led Taverns estate to continue to outperform the food-led Destination & Premium estate, with pub profits being almost equally split between the two estates,” said analysts at Peel Hunt.

The broker’s 2020 forecasts assume LFL sales rise 1.7%, assisted by extra investment in pub training, pub team incentives and digital marketing, with a forecast for 3% EBITDA growth and 8% net debt reduction.

LondonMetric measures the value of new subsidiary

LondonMetric Property PLC’s (LON:LMP) interims out on Wednesday will include the first financial results since the £415mln acquisition of A & J Mucklow Group earlier this year.

The FTSE 250-listed property developer is expected to have extracted value from the new subsidiary, which analysts describe as “well-managed”.

Consensus adjusted profit before tax is £71mln with net asset value of 181.7p.

Significant announcements expected for Wednesday November 27:

FinalsAB Dynamics PLC (LON:ABDP), Brewin Dolphin (LON:BRW), Britvic PLC (LON:BVIC), Grainger PLC (LON:GRI), Marston’s PLC (LON:MARS), On The Beach Group PLC (LON:OTB),

Interims: Iomart Group PLC (LON:IOM), LondonMetric Property PLC (LON:LMP), Sosandar PLC (LON:SOS)

Trading updateSoftcat PLC (LON:SCT), British American Tobacco PLC (LON:BATS)

Economic data: BRC shop price index, US GDP, US personal incomes, US personal expenditure, US jobless claims

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