Rolls-Royce, retailers, hoteliers and housebuilders to dominate corporate calendar in coming week

The week will also see trading updates from recruiters PageGroup and Robert Walters

JD Sports Fashion PLC - Retailers, hoteliers and housebuilders to dominate corporate calendar in coming week

The coming week will see engine maker Rolls-Royce Holding PLC (LON:RR.), various retailers, a hotelier and housebuilders dominate the corporate reporting calendar with results and updates, all of which being industries that have suffered badly under the coronavirus pandemic lockdown.

Later in the week, there will also be trading updates from the recruitment sector as fears over mass unemployment continue to rattle the UK.

JD Sports is back to the high street

On Tuesday JD Sports Fashion PLC (LON:JD.) is releasing its long-delayed results for the year ended January 31, 2020.

The retailer is unlikely to cause any upsets with its figures, having said earlier this year that headline pre-tax profit is expected to be “in the upper quartile of current market expectations” at between £403mln-£433mln.

Analysts expect revenue of £5.8bn, broadly around consensus, alongside an update on current trading and on the recent CMA ruling on its Footasylum acquisition.

The sports clothing retailer recently bought back its camping arm Go Outdoors from administrators, though some analysts don’t expect a stellar return to the high street.

RBC Capital Markets said the FTSE 250-listed firm’s longer-term margin recovery prospects may be compromised by a shift to online shopping, while its usually young customer base may see their spending confidence decrease amid a tough job market.

All eyes on Halfords’ margins

Another big set of finals is coming up from Halfords Group PLC (LON:HFD), one of the busiest retailers during lockdown.

The bike and car parts seller has already said that adjusted profit before tax for the year to end-March, 2020, would be at the upper end of the guided range of £50mln-£55mln.

The 23% sales drop in April, which topped the group's revised expectations, is estimated to have improved over the course of the past two months, although experts say investors should focus on margins.

“Sales are only one half of the equation and our real focus at these results will be cost control and cash conservation,” Hargreaves Lansdown analysts said in a preview.

“A large leasehold retail estate and accompanying staff costs mean some costs are unavoidable. But if the group can keep exceptional costs associated with moving to a socially distanced operating set up to a minimum it will have done well,” they added.

Whitbread updates as Premier Inn reopens

Premier Inn owner Whitbread PLC (LON:WTB) will issue a trading update for its first quarter on Tuesday, three days after its hotels will have reopened their doors following the lockdown relaxation on Saturday.

While the lockdown period is likely expected to see sharp declines, given most of its branches will have been closed, investors are likely to be more interested in the group’s trading outlook amid reports holidaymakers are rushing to get away after months at home, and likely have enough cash saved up to do so.

However, with international and business customers likely to be much less reliable while global travel restrictions remain, the company is unlikely to provide any firm guidance until things return to a more normal state.

Analysts at Jefferies have predicted that Whitbread will be one of the firms to recover fastest from the pandemic downturn, especially given the recent £1bn fundraising in May to shore up its balance sheet amid the pandemic closures.

The analysts expect Whitbread to reach 75% of 2019 occupancy by December and all of it by September 2021, while pricing will be restored by March 2022.

Shareholders may also be looking to see if the group will use the extra cash to target any strategic opportunities in the sector once the core business is back up and running.

Cash burn and engine flying hours on the cards for Rolls-Royce

Rolls-Royce Holding PLC’s (LON:RR.) trading update on Thursday is the first time the engine maker has released news after the 9,000 job cuts it announced in May.

Investors will be eager to hear what engine flying hours (EFH) have looked like in recent weeks, considering the 90% drop in April and its impact on group revenues.

Another key aspect will be the group's free cash flow, according to Hargreaves Lansdown.

“This will largely depend on what Rolls Royce can do with its cost base and what expectations are for the recovery of its biggest end markets,” Hargreaves' analysts commented.

“We know the group expects ‘a significant net cash outflow in the second quarter’, but some colour on exactly what this will look like would be helpful.”

Persimmon and other housebuilders look to build on sector success

Thursday will see a trading update from housebuilder Persimmon PLC (LON:PSN), which investors hope will continue the positive trend seen among its competitors as building sites reopen.

House prices appear to be holding relatively steady despite an initial slump in sales volumes as buyers were kept away by the lockdown measures, however, the pace of any economic recovery could still see them dip again.

Investors may seek any indication that the firm is looking to pursue opportunities in the sector, with peer Taylor Wimpey PLC (LON:TW.) having already raised around £500mln to buy up land. Persimmon may follow suit although it may be risky if the economy falters again.

There may also be an update on how the new socially distanced building sites have impacted costs, which could put pressure on margins.

Meanwhile, other players in the sector delivering updates in the week include Barratt Developments PLC (LON:BDEV) on Wednesday and Vistry Group PLC (LON:VTY) on Thursday.

For Barratt, UBS is expecting completions to be down 32% year-on-year to 12,237 alongside revenues of around £3.28bn, with margins coming under pressure from operational inefficiency due to pandemic disruption, resulting in a pre-tax profit of £516mln, down from £910mln in the prior year.

Meanwhile, the Swiss bank’s analysts are forecasting Vistry will see a 50% decline in completions in the first half of its current year to 1,376 units as a result of pandemic disruption, alongside revenues of £553mln and an operating profit of £43mln excluding joint ventures.

Recruiters called in for updates

Recruiters PageGroup PLC (LON:PAGE) and Robert Walters PLC (LON:RWA) are both due to post trading updates on Thursday.

The pair will be following up on a similarly synchronised quarterly update in April that showed how the coronavirus pandemic had taken a big bite out of market confidence.

In the first quarter to March 31, 2020, both companies saw gross profits drop by 11% - to £181mln for PageGroup and to £87mln for Robert Walters - despite cost-cutting plans being put in place.

As well as cancelling the final dividend of 9.4p per share for last year, PageGroup announced more stricter measures, looking to cut costs by 20-25%, versus a 15% reduction made at Walters.

Page’s dividend cut saved £30mln out of its £83mln of cash in the bank at the end of March while it also had a £30mln bank facility.

Robert Walters had £109mln in cash plus a £60mln committed loan facility at the end of the same period, with its eponymous chief executive saying he expected the second quarter to be “more challenging”.

Macro matters

The coming week’s UK macroeconomic data includes house price reports from Halifax and the RICS, plus the construction sector purchasing managers’ index survey from Markit.

Across the Atlantic, the ISM non-manufacturing survey and Markit’s services PMI on Monday and the continuing and initial weekly jobless claims data on Thursday will be the big focus. The Baker Hughes oil rig count is on Friday. 

In Europe, there’s investor confidence and retail sales data on Monday, while the European Commission will release its economic growth forecasts on Wednesday.

Significant announcements expected for week ending July 10:

Monday July 6: 

Economic data: UK construction PMI, US services PMI

Tuesday July 7:

Trading updates: Whitbread PLC (LON:WTB), Reach PLC (LON:RCH), Electrocomponents PLC (LON:ECM), Ferrexpo PLC (LON:FXPO)

Finals: JD Sports Fashion PLC (LON:JD.), Halfords Group PLC (LON:HFD)

Interims: Micro Focus International plc (LON:MCRO), RM Plc (LON:RM.)

Wednesday July 8:

Trading updates: Victrex plc (LON:VCT)

Finals: FirstGroup PLC (LON:FGP), U and I Group PLC (LON:UAI), Liontrust Asset Management PLC (LON:LIO)

Thursday July 9:

Trading updates: Rolls Royce Holdings PLC (LON:RR.), Persimmon PLC (LON:PSN), PageGroup PLC (LON:PAGE), Vistry Group PLC (LON:VTY), Workspace Group PLC (LON:WKP), Grafton Group PLC (LON:GFTU), Robert Walters PLC (LON:RWA)

Finals: Ilika PLC (LON:IKA)

Interims: Petropavlovsk PLC (LON:POG)

FTSE 100 ex-dividends to knock 4.63 points off the index: AVEVA Group PLC (LON:AVV), British American Tobacco PLC (LON:BATS)

Economic data: US weekly jobless claims

Friday July 10:

Economic data: US inflation

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