In the final full week of September, there's plenty of company news in the diary, including several UK companies suffering in the coronavirus pandemic and some that are thriving.
There will be key global economic data on Wednesday, but the event that will probably gain the most attention around the world is likely to be Tesla’s much-anticipated ‘battery day’ on Tuesday.
How long can the events industry remain on pause?
Kicking off the UK financial diary, global events and exhibitions organiser Informa PLC (LON:INF) will post interim results on Monday at what remains a time of heightened uncertainty for its industry due to rebounding coronavirus cases in many countries.
The last update from the FTSE 250 group, back in June, revealed that management were planning to restart some events in China from the following month, with the US and UK still on hold and events around the world “varying by region, customer confidence and event format”.
Informa, which had to cancel or postpone more than 160 events representing £300mln revenue this year, while another 300 switched to a digital rather than a physical event, acknowledged that events relying on international attendees will be impacted the most.
Analysts at JPMorgan Cazenove said they their doubts about the sector, as while many office workers are returning, “long haul business travel remains subdued and we expect the events industry to suffer longer than initially anticipated”.
With most analysts agreeing that 2020 is a write-off for the industry, the Caz analysts and some others are increasingly anticipating cancellations to extend into events currently planned for the first half of 2021, causing further downgrades to forecasts.
The one bright side could be the subscription-related businesses, which account for 35% of total revenue as events represent the other 65% last year, has performed well but could be affected by disruption to the academic year.
Investors and Musk army of fanboys and fangirls are charged up with excitement, while the battalion of Tesla bears reckon the whole thing is Musk hype.
The South African-born billionaire said earlier this year that the event will “blow your mind” and more recently added that there will be “many exciting things” to see.
Back in a January earnings call, Musk explained that in order to ramp up production of the Tesla Model Y vehicle, introduce the new Cybertruck and launch its Semi electric truck, a lot more batteries would be needed.
“The thing we’re going to be really focused on is increasing battery production capacity because that’s very fundamental – because if you don’t improve battery production capacity, then you end up just shifting unit volume from one product to another and you haven’t actually produced more electric vehicles,” Musk said.
While analyst Neil Wilson at Markets.com said all Musk’s pronouncements on Twitter should be “taken with a pinch of salt”, he is expecting some significant news at the event, which follows straight after an annual stockholders’ meeting that starts at 13:30 Pacific Time.
To deliver on its EV promise, Wilson said, “Tesla needs to own the battery space” as “without this, it’s not so different to an OEM”.
“My expectation is that Musk is about to announce if not a leap then a progression in battery technology that brings EV costs down to, or close to, traditional automobiles. It would be a surprise if Tesla were not able to say it has made further progress on batteries that are more energy dense and have a longer life.”
Kingfisher probably wouldn't mind another lockdown
B&Q and Screwfix owner Kingfisher PLC (LON:KGF) was having a tough time before the coronavirus crisis hit Europe, as it was demoted from the FTSE 100 with its shares trading at their lowest level since 2008.
But a revival of interest in DIY and gardening during lockdown powered the Anglo-French chain back among the blue chips.
Adjusted profits for the first half of the year to July 18, which are due on Tuesday, are expected to be ahead of last year’s £337mln.
Like-for-like sales in the first half were down 3.7% after jumping 21.6% in the second quarter, reflecting what the group said was strong e-commerce growth and the reopening of its DIY stores in the UK and France from mid-April.
Investors will be interested in how trading has gone in August and September, with Kingfisher having said it was entering the second half “with a favourable trading backdrop” but low visibility given the uncertainty surrounding coronavirus.
Kingfisher paid a 3.33p per share interim dividend last year but, said analysts at AJ Bell, “it may just be a bit early for the firm to re-join the dividend list, given the cloudy economic outlook,” although analysts are currently pencilling in a payment of 3.69p for the full-year.
Did SSP Group have a brighter summer?
SSP Group plc’s (LON:SSP) trading update on Wednesday will reveal whether the partial resumption of travel this summer has somewhat helped the dismal trading seen during lockdown.
Despite the uncertain outlook, it would be useful to know how the FTSE 250 group reckons the winter will be.
In July the food outlets operator said it was mulling over 5,000 job cuts due to the low numbers of passenger numbers despite restrictions eased across Europe.
By autumn it expected only around 20% of its units in the UK will have reopened, so the market will want to know whether that is confirmed.
Investors are also looking to hear more on the full-year guidance, following the £180-£250mln operating loss forecast for the second half alongside an 80%-85% year-on-year revenue slump.
Cussons having a quiet bath?
PZ Cussons PLC (LON:PZC), the maker of Carex and Imperial Leather soaps, hand wash and sanitiser gel, has not issued issued any news to the market since a third-quarter report in mid-April, since when its shares have climbed around 19%.
At the time, the FTSE 250 company has maintained its profit guidance for the year to May as it said its hygiene products sold in the UK, Australia and Asia have seen a spike in demand during the coronavirus outbreak.
Cussons said it was struggling to produce enough of its hand wash and soap products as it could not source enough raw materials, that its beauty business worldwide has been hit by social distancing measures, and that its major market of Nigeria was being hit by uncertainty over the fall in oil prices.
Management said they had cut capital expenditure but that had not taken up any state support to pay workers in the countries where it operates.
DFS comfortable on summer trading
The sofa seller benefitted from consumers spending more on their homes compared to other sectors, alongside with pent-up demand following lockdown, although many people may still be postponing big purchases going forward.
As of August, year-on-year order intake growth was equivalent to £70mln of revenues, which added to its previously announced opening order book that will generate a further revenue benefit of £100mln.
The market will be focused on the outlook for the 2021 financial year, with UBS forecasting a 28% jump to £929mln in revenue for profit before tax of £87mln.
“Management may give more information on their post COVID-19 strategy (in line with other recent company reporting) and may give additional details on the longer term strategy given the recent sale of Sofa Workshop,” analysts noted.
Dividends flowing like effluent in the utilities space?
The week brings financial updates from the water supply industry that follow news about the industry's contribution to the appalling state of England's rivers and that the government and regulators are "challenging water companies to improve their environmental performance", which comes not long after reports earlier in the summer about the sector's continued release of untreated sewage into Britain's rivers.
United Utilities Group PLC (LON:UU.), which also has atrocious record on water leakage, has a trading announcement due on Thursday, while sector peer Pennon Group PLC (LON:PNN) will release its numbers on Friday.
Revenues are expected to remain resilient as they come from supplying water to households, however there has been pressure on household finances during the crisis.
Companies have been well aware of a potential struggle with bills across the country, even among business customers.
Dividends for London's listed water firms have been curtailed by regulator Ofwat's plans for stricter financing requirements but investors in United Utilities are wondering whether they will see any payout this year, with the group's plans to grow the distribution for the next five years in line with inflation hit by a pause during the pandemic.
Pennon lifted its payout in June and said it will grow it at 2% above inflation over the next five years, so the market will want to know whether the promise holds up.
The main macroeconomic focus around the world next week is going to be the preliminary purchasing managers’ indices (PMIs) from the major industrial countries, which are scheduled for publication on Wednesday.
Looking at the forecasts, three things stand out to market analyst Marshall Gittler at BDSwiss: that UK and US service-sector PMIs are expected to decline, that all manufacturing PMIs are expected to decline except France’s, and that the Eurozone service-sector PMIs are expected to gain only slightly.
“We can dismiss the expected fall in the UK and US service-sector PMIs as a function of the fact that they’re relatively high to begin with,” he said.
The last UK services PMI for example was the highest it’s been since the spring of 2015, so a decline there and in the US would still leave both comfortably in expansionary territory.
There will be some important speeches during the week, including Bank of England governor Andrew Bailey on Tuesday and Thursday after the monetary policy committee said it would “begin structured engagement on the operational considerations” for implementing negative rates.
Significant announcements expected for week ending 25 September:
Monday September 21:
Finals: Finsbury Foods Group PLC (LON:FIF)
Tuesday September 22:
Interims: Kingfisher PLC (LON:KGF), AG Barr PLC (LON:BAG), Alliance Pharma PLC (LON:APH), ASA International Group PLC (LON:ASAI), Cambridge Cognition Holdings PLC (LON:COG), Ergomed PLC (LON:ERGO), Frenkel Topping Group PLC (LON:FEN), Inspecs Group PLC (LON:SPEC), Judges Scientific PLC (LON:JDG), Longboat Energy Plc (LON:LBE), NAHL Group PLC (LON:NAH), Parity Group PLC (LON:PTY), Personal Group Holdings PLC (LON:PGH), Tremor International Ltd (LON:TRMR), Oriole Resources PLC (LON:ORR)
Economic data: UK government borrowing, CBI industrial trends, US home sales
Wednesday September 23:
Interims: Cloudcall Group PLC (LON:CALL), ECSC Group PLC (LON:ECSC), Equals Group PLC (LON:EQLS), LoopUp Group PLC (LON:LOOP), Strix Group PLC (LON:KETL), The Mission Group PLC (LON:TMG), Warpaint London PLC (LON:W7L), Xeros Technology Group PLC (LON:XSG)
Economic data: UK flash manufacturing PMI, UK flash services PMI, US flash manufacturing PMI, US flash services PMI
Thursday September 24:
Interims: Cineworld Group PLC (LON:CINE), SIG PLC (LON:SHI), Pendragon PLC (LON:PDG), Faron Pharmaceuticals Oy (LON:FARN), Biome Technologies plc (LON:BIOM), Ebiquity PLC (LON:EBQ), GYG PLC (LON:GYG), Portmerion Group PLC (LON:PMP), RTW Venture Fund Limited (LON:RTW)
Economic data: US jobless claims, ECB General Council meeting
Friday September 25:
Economic data: UK GfK consumer confidence, UK car production, US durable goods orders