Tuesday will reveal whether the supermarket sector has seen any further softening in the unprecedented sales growth companies have enjoyed since the UK went into coronavirus lockdown.
A month ago, data from Kantar showed that grocery sales growth was still strong but had started to slow slightly as the government continued to ease up on its restrictions and encourage an ‘opening up’ of the economy, with households starting to return to more normal behaviour.
Supermarket till takings in the 12 weeks to mid-July were up 16.9% year on year, the fastest since records began in 1994, though growth had begun to decelerate to 14.6% in the latter four weeks of the period.
This was backed up by data from Nielsen, which will also be providing an update this week, showed four-week growth slowed to 10% from 14%.
Of the listed operators, Ocado Group PLC (LON:OCDO) has been leading the charge for the last few months, with growth of 45.5% in the latest period, up from 42% and 32.5% in the previous two reports.
WM Morrison Supermarkets PLC (LON:MRW) was the fastest growing in the last report, with a rise of 17.4% up from 10.5%; while Tesco PLC (LON:TSCO) was up 15.1% from 12.1% in the prior report; and J Sainsbury PLC (LON:SBRY) improved to 13.5% from 12.5%.
Persimmon and housebuilders enjoying ‘mini boom’
A day ahead of its interim results, Persimmon PLC (LON:PSN) got a boost from broker Davy, which upgraded the shares to remove its previous ‘underperform’ rating and go to ‘neutral’.
This was based on a recent trading update where the FTSE 100 group said sales volumes had spiked 30% in the last six weeks to June, though the 4,900 house sales completed in the first half of the year was down from 7,584 last year.
The housebuilder, where boss David Jenkinson has given his notice and will be replaced by Dean Finch at the end of the year, said revenues were going to tumble 32% to £1.1bn, though it still has ample net cash of £830mln plus further credit facilities available.
Davy's analysts upgraded what they admitted was already a rather optimistic volume forecast for 2020 by roughly 4%, now expecting about 13,100 homes sold for the full year, down 17.5% compared to 2019.
The Irish broker's operating profit forecasts have also increased by 4% to £759mln for the full year, about 5% ahead of the general City consensus.
For the half-year, investors should expect a profit before tax and one-offs of £286mln, analysts at UBS reckoned, down from £513mln a year ago, saying that an update on the sales rates in July and August will be “key” as a flattening-off is expected “as other homebuilders have regained normal market shares”.
With Persimmon having cancelled a proposed 125p per share interim dividend that had been due in April and saying it will re-evaluate its postponed final dividend of 110p per share for last year in the coming months, UBS expects an interim dividend for 2020 of 110p.
BHP first miner to unearth numbers
BHP Group PLC (LON:BHP) will kick off a trio of results from major mining firms this week.
Following its full-year production update, investors have already had a preview of what to expect in the results, with production and volumes having risen in the company’s important iron ore division, which accounted for just over half of its profits last year.
However, the Anglo-Aussie colossus faces pressure in some of its other business lines, notably copper, petroleum and coal which have all seen assets hit by the coronavirus pandemic and an oil price crash earlier this year.
Costs and debt control are likely to in focus after BHP predicted the latter will come in at the lower end of its US$12bn-US$17bn target range, which should bode well for its dividend payments.
There is also likely to be some interest in the company’s future spending plans, particularly whether pressure from investors to decarbonise may drive the company away from petroleum exposure.
Wood should not surprise
John Wood Group PLC’s (LON:WG.) half-year results on Tuesday shouldn’t come as a surprise following an update in June.
The energy services company guided for a revenue drop of 11% in the six months to June 30, 2020, with adjusted underlying earnings (EBITDA) down 19% to US$295-305mln.
Revenue was estimated to be around US$4.1bn, with operating profit before exceptional items around US$80mln-90mln.
Investors will also want to know how the US$200mln cost savings goal for the full year is progressing, alongside the debt position and how the second half is expected to pick up.
Major announcements due on Tuesday August 18:
Finals: BHP Group PLC (LON:BHP)
Interims: Persimmon PLC (LON:PSN), John Wood Group PLC (LON:WG.), KAZ Minerals PLC (LON:KAZ), Network International Holdings, PLC (LON:NETW), TBC Bank Group PLC (LON:TBCG), TI Fluid Systems PLC (LON:TIFS), Marshall Motor Holdings Plc (LON:MMH), Mears Group PLC (LON:MER), Telit Communications PLC (LON:TCM)
Economic data: Kantar food retail, US housing starts, US building permits