Rolls-Royce cash-burn in spotlight as it prepares first update since jobs cull

Housebuilders Persimmon and Vistry Group, together with recruiters PageGroup and Robert Walters are also among the notable names in the corporate diary for Thursday

Rolls-Royce Holdings PLC - Rolls-Royce cash-burn in spotlight first update since jobs cull

Rolls-Royce Holding PLC’s (LON:RR.) trading update on Thursday is the first time the engine maker has released news since 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 looks to build on sector success

Thursday will also 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.

Peer Vistry Group PLC (LON:VTY), formerly Bovis Homes before it acquired Galliford Try's housebuilding operations, Linden Homes, is also due to issue an update on Thursday.

Recruiters called in for updates

Recruiters PageGroup Plc (LON:PAGE) and Robert Walters Plc (LON:RWA) are both due to post trading updates too 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”.

Significant announcements expected on 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)

Economic data: US weekly jobless claims

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