Kingfisher may still be flying high; Tesla's battery event could be highly charged

There should also be a trading update from tour operator TUI

Kingfisher PLC -
Tesla needs a lot more batteries to launch its Cybertruck

As the UK government scientists warn the public that a change of behaviour is needed to avoid another coronavirus lockdown, Tuesday’s business diary brings some companies that have had a very different time during 2020. 

Starting on home shores, Kingfisher PLC (LON:KGF) might not mind another lockdown, as while the B&Q and Screwfix owner 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, 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 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.

TUI laid low

Tour operator TUI AG (LON:TUI), meanwhile, is likely to still be struggling amid an apparent second wave of the pandemic in Europe. 

It is due to publish a pre-close trading update on Tuesday, following a statement last month where the Anglo-German group said it is considering a rights issue or a sale of part of the business after reported an eye-popping 98% drop in revenue and a €1.5bn loss for what was its third quarter as COVID-19 continued to wipe out the travel sector.

The group has lost roughly €2.3bn for the first nine months of its financial year to June 30, 2020, including €1.3bn of underlying costs from a business that had been pretty much shut down since March, plus €410mln of impairments and €189m of costs from ineffective hedges.

Bookings for summer 2020 are down 81% on last year and average selling prices 10% lower, with just 16% of its original programme sold because of cancellations since mid-March, versus 88% sold at the same point last year. 

And this month it received a further blow from the Competition and Markets Authority, which ordered the company to pay all outstanding refunds for cancelled holidays by September 30,

The UK competition watchdog carried out an investigation after receiving thousands of complaints from people who were not getting refunds for their cancelled holidays within 14 days, which is the limit set by consumer protection law.

Tuesday aka Battery Day

On Tuesday afternoon, Tesla Inc (NASDAQ:TSLA) will hold its much anticipated “Battery Day” event straight after an annual stockholders’ meeting that starts at 13:30 Pacific Time, or 9.30pm in London.

Investors and Musk's army of fanboys and fangirls are charged up with excitement ahead of this event, 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.

Musk said earlier this year that a lot more batteries would be needed in order to ramp up production of the Tesla Model Y vehicle, introduce the new Cybertruck and launch its Semi electric truck.  

“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. 

READ: Tesla’s 'battery day' next Tuesday could be ground-breaking for several industries

Analyst Neil Wilson at Markets.com said many of Musk’s pronouncements on Twitter should be “taken with a pinch of salt”, but this time he is expecting some significant news at the event.

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.”

Significant announcements on Tuesday September 22:   

Finals1PM PLC (LON:OPM), Bluefield Solar Income Fund Limited (LON:BSIF), Litigation Capital Management Ltd (LON:LIT)

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

Trading statement: TUI AG (LON:TUI)

Economic data: UK government borrowing, CBI industrial trends, US home sales 

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