Tuesday will bring some results and updates from some notable FTSE 100 names, including some from sectors traditionally seen by investors as offering 'defensive' qualities in times of trouble.
One of the blue chips in the spotlight will be Vodafone Group plc (LON:VOD) as it posts final numbers that come against a backdrop of an increasingly competitive market after mobile operator O2 and broadband giant Virgin Media agreed a merger last week.
Vodafone had agreed to host all of Virgin Media's customers on its network from the end of 2021, though most experts reckon Virgin Media will now move on O2's network instead.
Analysts also say it could also create uncertainty on a mobile masts services joint venture between O2 and Vodafone, Cornerstone Telecommunications, that the pair were said to be looking to sell.
Vodafone management are not likely to address the issue directly, but investors will look at the outlook and at recent trading for how the company is currently managing what is already a highly competitive industry, which has become perhaps even more important amid the coronavirus lockdown.
Morgan Stanley analysts have forecast underlying profit of €14.93bn for the year as service revenue growth is expected to have improved to 1.1% in the fourth quarter from 0.8% in the third, which "is a bullish lead indicator, we believe".
After Vodafone cut its dividend 40% a year ago, the analysts do not expect a cut this year, indeed are anticipating a 1% increase as the payout ratio "remains comfortable in our view" and balance sheet leverage is predicted to have fallen to 2.9x from 3.4x a year ago.
Morrison's follows supermarket rivals
Grocer WM Morrison Supermarkets PLC (LON:MRW) is set to deliver a trading update on an unprecedented period for the grocery industry, with recent updates from larger rival Tesco showing sales rose as much as 30% in the first few weeks of the outbreak, while Sainsbury’s saw its own sales jump 12%.
While sales across the sector should even out over time, investors are likely to watch how Morrisons is going with its self-stated mission "to feed the nation during the coronavirus outbreak", boosted by
There will be attention on how the group plans to keep costs low and preserve cash going forward, plus its online efforts, including a new partnership with Deliveroo for grocery delivery services from some of its stores, plus with Ocado recently revealing that Morrisons had increased the use of the platform for store-pick fulfilment for online during the lockdown.
Berenberg recently upgraded the Bradford-based group to ‘buy’ from ‘hold’ as they expect the firm’s sales to “surge as a result of increased grocery demand since the start of the UK lockdown in March” and that its “limited non-food and banking exposure” was positive compared to its peers.
The group’s lower price positioning is sees as likely to appeal to consumers trading down, while partnerships with Ocado and Amazon boost the online offering and Morrisons’ balance sheet supported by high freehold means the strong dividend yield is sustainable, the analysts said, with Morrisons’ wholesale business also seen as a key future beneficiary of sector consolidation post-coronavirus.
Land Securities to clarify state of UK property market
Coming on top of the structural shift in the retail market, the impact of coronavirus adds yet another layer of pressure on property developer Land Securities Group PLC (LON:LAND), which will announce results for the financial year ended 31 March.
The property development giant's share prices has fallen around 38% since the start of the year, with most of the real estate investment trust (REIT) sector hit hard by expectations of lower rents and valuations.
UK property capital values fell 3% in March compared to February, according to the last available industry data from CBRE.
Last month, LandSec said it had already seen a “huge shift in the use of our buildings” and that it was agreeing on rent deferrals with many retail and leisure occupiers after receiving only 65% of the rent due on 25 March by end of the month compared with 96% in the same period last year.
It has recently been suggested by figures outside the property industry that the future dynamics of big office buildings are going to be different in future, after the big change in working from home during the coronavirus lockdown.
“The notion of putting 7,000 people in a building may be a thing of the past,” said Barclays chief executive Jes Staley.
Announcements expected on Tuesday 12 May:
Finals: Vodafone Group plc (LON:VOD), Land Securities Group PLC (LON:LAND), Inspecs Group PLC (LON:SPEC)
Interims: Treatt PLC (LON:TET)
Trading announcements: Greggs PLC (LON:GRG), WM Morrison Supermarkets PLC (LON:MRW), Premier Oil PLC (LON:PMO), Renishaw plc (LON:RSW)
Economic data: US inflation