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Barclays to kick off bank results in coming week; Unilever and William Hill to issue updates and UK inflation data eyed

Other firms on the calendar for the week ahead are Dettol owner Reckitt Benckiser, price comparison site Moneysupermarket and the London Stock Exchange Group

Barclays PLC - Barclays to kick off bank results in coming week, Unilever and William Hill to issue updates as UK inflation data eyed

The coming week will see the start of the UK’s third quarter banking results season with Barclays PLC (LON:BARC) first out of the starting blocks on Friday. However, before then, investors will be eyeing updates in the week from consumer goods giant Unilever PLC (LON:ULVR) and bookmaker William Hill PLC (LON:WMH) among others.

On the macro front, UK inflation data will be the big news in the week, while UK flash PMIs and US jobless claims will also provide some flavour.

Bellway rings in with an update

Bellway PLC (LON:BWY), which announces full-year results on Tuesday, has already reported that it saw a 31% decline in housing revenues to £2.2bn during the 12 months to July 31, 2020, as completed sales were down by the same percentage.

The housebuilder at the time pointed to incremental costs arising from lower productivity amid the coronavirus (COVID-19) lockdowns, which it said will result in a lower gross margin across its building sites for the past year.

As such, UBS expects the main focus of the results to be around profitability, current trends in activity and an outlook for the new financial year.

Forecasting a sizeable drop in gross profit margins, analysts at the Swiss bank have pencilled in an underlying operating loss in the second half of the year for Bellway of £8mln, or £80mln including one-offs.

The analysts think sales rates may well have continued to improve in the new financial year and that pricing will have remained firm.

Interestingly, larger rival Barratt Developments PLC (LON:BDEV) recently said that while demand for new houses has remained strong, buyers are increasingly relying on the government’s help-to-buy scheme, and that since the coronavirus pandemic there has been a material change in loan to value (LTV) lending criteria.

Reckitt looks to clean up

Reckitt Benckiser Group PLC (LON:RB.), the owner of Dettol and Air Wick, has so far come out as one of the few beneficiaries of the coronavirus pandemic as higher demand for cleaning products had its goods flying off the shelves.

With a trading update due on Tuesday, investors will be hoping the growing second wave of infections has also served to boost demand from both consumers and professional customers such as hotels, airlines and car hire firms.

Also on the agenda will be an outlook for investing, with Reckitt chief executive Laxman Narasimhan saying in July that the company aims to put more money back into the business after its cash flow doubled in the first half of the year.

William Hill odds on for an update

A trading update from bookmaker William Hill PLC (LON:WMH) on Wednesday will likely be all about the outlook, particularly in the short-term as the UK government’s new lockdown restrictions threaten to force the bookmaker and its peers to shutter some of their stores in affected areas as Britain tries to flatten out the infection rate of a second coronavirus wave.

However, the UK situation will only be part of the story, with the US likely to be the subject of the longer-term focus as the company is seemingly on the cusp of being snapped up by Las Vegas casino operator Caesars Entertainment, which made a £2.9bn offer for the group last month.

With William Hill’s board seeing the bid at a level they would consider, any updates on the process will be closely eyed, as well as any notes on US strategy as the firm seems set on pivoting across the Atlantic to avoid the looming spectre of increased regulations in the UK betting market.

All eyes on Unilever’s profits

On Thursday Unilever PLC (LON:ULVR) will update investors on its third-quarter numbers, following second-quarter sales that came in way above expectations.

Q3 sales are expected to rise 1.3% as per consensus, which is below the consumer goods company’s long-term goal of 2% to 4% but remains defensive in coronavirus pandemic times.

In a preview, AJ Bell noted that developed markets, especially the US, have been more resilient than emerging markets, which is why sales of household care, cleaning and in-home products have held up better than more discretionary items such as ice-cream and beauty products.

Analysts will look at the group's underlying performance as well as any comments on full-year underlying operating profit guidance, which consensus currently places at €9.7bn, a touch below last year’s €10bn.

That would imply an improvement in the underlying operating margin to 19.3% from 19.1% as Unilever strives to get to its 20% target.

The market will also look for updates on the tea business, expected to be placed into a separate entity by the end of 2021, as well as the unification of the FTSE 100-lited firm at its headquarters in London.

Moneysupermarket in the cart

Moneysupermarket.com PLC (LON:MONY) is releasing an update on Thursday where investors will look for news on the insurance market and the money vertical, which have been relatively weak.

The market is also wondering how the energy Autosave product launch went, and when the new chief executive will unveil news on the group strategy.

Peel Hunt noted that the price comparison website is cash generative and still paying a dividend, and the share price is at a level off which it has bounced three times in the last five years.

Barclays kicks off banking results season

Barclays PLC (LON:BARC) will be the first of the UK’s big banks to report third-quarter results, which it will do on Friday with its shares trading around the same level they did in 1991.

Bank shares, as a rule, have been flattened by the coronavirus pandemic, with the FTSE 350 bank sector the third-worst performer over a five year period.

Barclays shares are now trading at less than 0.3 times book value, reflecting sector-wide concerns about low interest rates, coronavirus losses and the lack of dividends.

However, unlike some of its UK rivals, Barclays has a substantial investment banking arm, which allowed underlying profits to surge in the first half of 2020, even though at the bottom line profit plunged by 77%.

“The most immediate challenge facing the industry is a rise in bad loans,” said analysts at Hargreaves Lansdown in a preview, with Barclays having set aside £3.7bn in the first half of the year as it prepares for rising unemployment and corporate bankruptcies to result in less of its loans being repaid.

“We don’t think the global economic picture has improved much since then and expect more provisions this quarter,” the analysts added.

But, expecting loan losses to have benefitted from better than expected macro data, low levels of corporate defaults and continued good investment bank revenue, analysts at UBS forecast a quarterly adjusted profit before tax of £495mln.

LSE Group hopes to continue cashing in from market turmoil

A trading update from London Stock Exchange Group PLC (LON:LSE) on Friday will likely be eyed for any news on how the company has fared during the period of market volatility as a result of the coronavirus pandemic, which has sent investors both dipping in and out of the market with heightened frequency.

The company was one of the few major FTSE 100 firms to continue paying a dividend during the worst period of the pandemic, as increased trading and volatility in the early days boosted revenues. With things a little calmer but with plenty of factors that could spark renewed activity, the outlook statement will likely to be watched closely.

Shareholders are also likely to look for any updates on the company’s €4.3bn sale of the Milan stock exchange to Euronext, announced last week, as part of efforts to fund its own US$27bn acquisition of market data group Refinitiv.

Cold winter check-in at Intercontinental Hotels

Intercontinental Hotels Group PLC (LON:IHG) closes the week out with a quarterly update where there may be dire predictions of how the winter will pan out.

The hotel operator has fared better than many competitors thanks to its franchise system, so it stayed off the hook for running costs.

Global occupancy dropped 25% in the second quarter and revenue per room halved in the first six months of the year, but the FTSE 100-listed firm remained profitable.

“With occupancy levels rising, thanks to Holiday Inn staycations in America, and other key markets opening up, there’s hope this model will continue to work,” said Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown in a preview.

“However, with fresh social distancing restrictions imposed across Europe and regions being locked down one by one, there are big clouds on the horizon.”

US market tunes into Netflix as earnings season rolls on

With the US earnings season now in full swing, streaming giant Netflix Inc (NASDAQ:NFLX) is scheduled to deliver its third-quarter number on Tuesday, having guided cautiously for the period back in July after its second-quarter figures smashed forecasts thanks to a demand boom during coronavirus lockdown and the closure of cinemas across the world.

The key areas of interest will be the profit and loss account and subscriber numbers and whether these line up with guidance from chairman Reed Hastings, who forecast in July that the quarter will see net subscriber additions of 2.5mln, revenues of US$6.3bn and operating profit of US$1.25bn.

Also under the spotlight will be the group's new content pipeline, which has been held up by the pandemic, as well as the status of the group’s cash flow.

Other big US names also making an appearance with results during the week, including electric car maker Tesla Inc (NASDAQ:TSLA) on Wednesday and fellow tech giants Amazon Inc (NASDAQ:AMZN) and Microsoft Corp (NASDAQ:MSFT) on Thursday.

Tesla revving up

Tesla Inc (NASDAQ:TSLA) will lift the boot on quarterly earnings after the close on Wednesday, with analysts expecting revenue to jump 31% year-on-year to US$8.3bn.

Tesla has recently announced price cuts across its models and pushed global deliveries to 139,300 in the third quarter, which must accelerate further to 181,000 in the final three months of the year to meet founder Elon Musk's 500,000 target for this year.

With the electric car manufacturer's shares up 426% this year there is a lot at stake for Tesla.

"The key catalyst for Tesla in the short-term is the growing EV market in China which is supplied through its Gigafactory in Shanghai and the outlook for China sales is key to how the stock price will react," said Peter Garnry, head of equity strategy at Saxo Bank.

"The historical absolute change around earnings releases has been around 9.5% and we expect a lot of volatility around Q3 earnings simply because of the enormous momentum in the stock price this year."

Macro matters

The coming week will see a fair amount of macroeconomic data on the UK and some of the world’s big economies, as well as rumbling political issues on both sides of the Atlantic.

Most of the economic interest is going to be on Friday, with the flash October purchasing managers’ indices (PMIs) from the major global economies, plus consumer confidence readings.

For the UK, the ‘flash’ services data for the early part of October is expected to see a decline from the 56.1 figure for September.

Official UK retail sales data is also due on Friday, with the market expecting a softening of monthly growth to 0.4% in September from 0.6% in August.

The Office for National Statistics will also be putting out data on consumer price and house price inflation on Wednesday, and there is also an industrial trends survey from the CBI on Thursday.

"Pre-Brexit uncertainty and the likely impact of re-imposed restrictions on businesses and consumers will make the rebound in activity enjoyed in Q3 all the more difficult to sustain," said commentators at broker Peel Hunt. "The flash PMIs and consumer confidence readings due on Friday may see the appearance of some cracks."

The two weeks ahead should be the calm before the storm of the US election on Tuesday, November 3, which comes in the same week as a Federal Reserve meeting for the first time since 1984, not to mention a Bank of England meeting and US jobs numbers, noted market analyst Marshall Gittler at BDSwiss. Watch out for all that previewed in a few weeks time!!!

Significant announcements expected for the week ending October 23:

Monday October 19:

Finals: Tristel PLC (LON:TSTL)

Tuesday October 20:  

Trading updates: Reckitt Benckiser Group PLC (LON:RB.), BHP Group PLC (LON:BHP), Luceco PLC (LON:LUCE), Gamesys Group PLC (LON:GYS)

Interims: TP Group PLC (LON:TPG)

Finals: Bellway PLC (LON:BWY), Softcat PLC (LON:SCT), Transense Technologies PLC (LON:TRT)

Wednesday October 21:

Trading updates: William Hill PLC (LON:WMH), Antofagasta PLC (LON:ANTO), Segro PLC (LON:SGRO), Centamin PLC (LON:CEY), Quilter PLC (LON:QLT), Avast PLC (LON:AVST), Fresnillo PLC (LON:FRES)

Interims: C&C Group PLC (LON:CCR)

Economic data: UK inflation

Thursday October 22:

Trading updates: Unilever PLC (LON:ULVR), Anglo American PLC (LON:AAL), AJ Bell PLC (LON:AJB), Moneysupermarket.com Group PLC (LON:MONY), Rentokil Initial PLC (LON:RTO), Secure Trust Bank PLC (LON:STB), Spectris PLC (LON:SXS), Travis Perkins PLC (LON:TPK), RELX PLC (LON:REL), Polymetal International PLC (LON:POLY), GB Group PLC (LON:GBG)

FTSE 100 ex-dividends to knock 1.71 points off the index: BAE Systems PLC (LON:BA.), Smiths Group PLC (LON:SMIN)

Economic data: US jobless claims, US home sales

Friday October 23:

Trading updates: Barclays PLC (LON:BARC), London Stock Exchange Group PLC (LON:LSE), Intercontinental Hotels Group PLC (LON:IHG), Essentra PLC (LON:ESNT)

Interims: Airtel Africa PLC (LON:AAF)

Economic data: UK retail sales, UK consumer confidence, UK flash PMIs, US flash PMIs

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