Friday will conclude the week with a few more updates from the blue-chips in the form of Vodafone Group PLC (LON:VOD) and Centrica PLC (LON:CNA).
There will also be some notable macro news with UK retail sales and flash PMIs in the calendar.
Vodafone dials in
Mobile telecoms group Vodafone is under continuing pressure due to its debt pile, as well as concerns over whether the €18.4bn purchase of Liberty Global’s European cable assets was the right thing to do, and the possible costs of acquiring 5G spectrum and equipment in the face of Huwaei's forced exit from the UK by 2027.
“Nagging doubts over group structure, and whether the firm is basically an investment trust of telecom licences and operations also won’t quite go away, after a period of disappointing profit and cash flow which culminated in 2018’s dividend cut,” analysts at AJ Bell pointed out in a preview.
“Shareholders are now also trying to work out whether Vodafone’s business could benefit from COVID-19 or not, either as consumers downloaded more data and media during lockdown or workers remain at home rather than in the office. CEO Nick Read flagged both trends alongside May’s full-year results but at the same time he cautioned about a hit to roaming revenue thanks to the collapse in international travel for pleasure or business and the risk that some customers find it harder to pay their bills.”
The market will also want to hear about Vodafone's current €42bn debt pile, alongside updates on the spin-off of its European tower infrastructure arm.
Centrica heats up with interim results
Centrica PLC (LON:CNA) will also report its results on Friday after being demoted from the FTSE 100 last month.
Around the same time, the British Gas parent said it is planning to slash 5,000 jobs and downsize its board in what it said was a “significant restructure” to simplify the business model, with fewer business units.
“The announcement seems to reverse an earlier one that said restructuring projects would likely be delayed by coronavirus – so we’re keen for clarification on plans and savings potential next week,” according to analyst Emilie Stevens at Hargreaves Lansdown.
Original expectations were for £350mln in cost savings to be delivered in 2020, adding to the £1.25bn achieved since 2016 and moving the group closer to the target of £2bn in savings by 2022.
The coronavirus lockdown has significantly affected energy usage, with residential usage up but business demand having reduced more significantly.
Centrica has said this prevented it from giving earnings guidance for the year, but with more companies getting back to business the firm could perhaps now give an idea of the outlook.
Retail sales and flash PMIs
The key UK macro data at the end of the week is IHS Markit’s ‘flash’ manufacturing and services purchasing managers’ index surveys for July.
The services PMI is expected to remain around the 47 mark, just below the 50 level that separates contraction from growth, while the manufacturing PMI is seen improving to 53.2 from 50.1. US and data from other countries will also be released on the same day.
Also on Friday there will be retail sales data from the Office for National Statistics, preceded earlier in the week by the CBI industrial trends survey on Thursday and Rightmove’s house price index on Monday.
“The evidence from other countries that exited the lockdown before the UK, as well as more timely data from the British Retail Consortium, suggests there’s a good chance overall retail sales resembled something much closer to pre-virus levels in June,” according to economists at ING.
“We expect to see another sharp rebound, although this probably masks big changes in the way consumers are spending.”
Significant announcements expected for Friday July 24:
Trading updates: Vodafone Group PLC (LON:VOD
Interims: Centrica PLC (LON:CNA), IMI PLC (LON:IMI), Pearson PLC (LON:PSON)
Economic data: UK retail sales, UK flash PMIs, US flash PMIs