With the gluttony of the holiday season in sight, it may or may not be a convenient time for a smorgasbord of companies across the food supply chain to report results in the coming week.
This smorgasbord will range from animal breeding and feeding specialists Genus and Eco Animal, through to meats giant Cranswick, sausage churner Devro and catering colossus Compass.
As well as digesting that meaty theme, water and sewage companies will be under the microscope too, with the spotlight having been cast on the industry's shadier practices in the past week as an investigation has been launched by two regulatory bodies into illegal releases of untreated waste into rivers.
Other big releases in the week, include construction materials group CRH and chemicals specialist Johnson Matthey after its recent profit warning.
CRH buoyed by Biden’s infrastructure bill
CRH PLC (LSE:CRH) is due to put out a trading statement on Tuesday, covering the first nine months of 2021.
Shareholders will be hoping that recent improvements in margins can be maintained, while future prospects for its main market of the USA look strong after President Biden’s US$1trn infrastructure package was approved recently.
The FTSE 100 building materials giant said back in August that it expected the second half of the year to see profits rise year-on-year, if the weather behaves, which by and large it has done.
UBS expects the group to record 2% like-for-like sales growth for the third quarter, driven by a 2% rise in Europe materials, a 2% increase in Americas materials and a 4% hike in building products.
As CRH usually gives guidance for full-year underlying earnings (EBITDA) the analysts said they currently forecast US$5.2bn for 2021, while the City consensus is at US$5.16bn.
Compass points
Compass Group (LSE:CPG) has already given a heavy steer over how its final numbers will look, so the interest in its Tuesday full-year results will be the state of the recovery in the contract catering markets going into 2022.
The FTSE 100 group’s business segment has been the laggard in 2021 and with Covid-19 proving to be a stubborn opponent, there yet might be more delays to a full recovery here.
Cost inflation in the food sector and staff shortages will also be keenly felt by Compass and how it is dealing with these will be something else to watch.
The group has already indicated revenue in the fourth quarter to 30 September was around 86% of 2019 levels, slightly ahead of guidance of 80-85% and for the full year should be around 76% of 2019.
Fourth quarter operating margins also recovered to 5.5% to 6% and will be around 4.4% in the full year, it said, which investors will want confirmed while some progress on reducing debt will also be welcome say analysts.
Food supply chain in focus for Cranswick, Devro
Also on Tuesday, half-year results from foods producer Cranswick PLC (LSE:CWK) should reveal how much effect the gradual return of workers to offices is having on the food-to-go channel.
When last we heard from Cranswick, in July, it said it had made a positive start to the new financial year as revenue from this channel continued to fatten up.
Sales in the 13 weeks to 26 June were 9.6% ahead of the same period last year, with corresponding volumes up 7.7% reflecting strong retail demand and increased sales from its Eye poultry facility.
Peel Hunt expects strong volume growth over the half-year period and is forecasting profits to be up by 10% to around £67mln.
“The company has seen supply chain challenges (e.g. labour shortages), but has generally been able to maintain service levels, which has helped win additional business (e.g. poultry with Morrisons),” the broker said.
“The supply chain issues will mean that retailers will look closely at their supply chain to understand resilience and capability,” Peel Hunt said.
The meat theme continues with Devro PLC (LSE:DVO) - “making great sausages possible across the globe” - on the same day, with Genus PLC (LSE:GNS), whose expertise in cow and pig sexing helps breeders make the best meat, following a day after with a statement expected alongside its annual meeting, before it is the turn of Eco Animal Health Group PLC (AIM:EAH) to report interims on Thursday.
Peel Hunt expects “positive commentary” to have continued for Devro but price increases are likely to be on the table.
For Genus, the analysts expect trading performance to be behind last year due to the sharp reduction in Chinese pig prices, which they see as “likely to be temporary”, with the company’s improving cometitive position in bovine and porcine, along with early developments in aquaculture, seen as “more important” for long-term value creation.
Similarly, prices in China are likely to have affected performance for Eco Animal Health too, but as pig prices have started to rebound in recent weeks, this “should ensure a stronger 2H”.
Animals of the more strokable kind are also a feature over the week, with Pets at Home PLC and CVS Group (AIM:CVSG) PLC also reporting updates on Tuesday and Wednesday respectively.
Details please, Johnson
Good news is needed for Johnson Matthey PLC (LSE:JMAT) (Johnson Matthey PLC (LSE:JMAT)), as it delivers interim results on Wednesday, November 24, though it is not clear whether it will be forthcoming after the recent profit warning.
“The numbers themselves are unlikely to provide what the group is looking for, having already said half year results are set to be ‘in-line with market expectations’,” Hargreaves analyst Nicholas Hyett said.
And the full year is expected to be even weaker, at “the lower end of market expectations” as the pandemic disrupts automotive manufacturing – the group’s key end market.
“Instead, it’s commentary around future investment opportunities that will be closely watched,” Hyett said.
Last week, Berenberg analysts predicted that the appointment of Liam Condon as JMAT's new boss makes a break-up of the group likely. (READ our full company preview here.)
Is the sewage going to hit the fan?
Water companies Severn Trent PLC (LSE:SVT) and United Utilities Group PLC (LSE:UU.) report half year results on Tuesday and Wednesday, with the sewage potentially poised to hit the fan as regulators the Environment Agency and Ofwat in the past week launched an investigation into illegal releases on untreated waste into rivers.
The investigation will be carried out into around a third of waste treatment plants in England and Wales, with any company caught breaching their legal permits liable to enforcement action, including fines of up to 10% of annual turnover for civil cases, or unlimited in criminal proceedings.
Potentially illegal spills were found by the EA at a number of sewage treatment works , with several water companies admitting many of their plants may comply with the permits issued to allow them to release raw sewage in “exceptional circumstances”.
Emma Howard Boyd, EA chair, said: “Any water companies in breach of their permits are acting illegally. This is a major issue of public trust. Water company boards must certify every year that they have adequate resources to fulfil their regulated activities.”
Analyst Laura Hoy at Hargreaves sees a ‘glass half full’ recovery for the water utility: “Post-pandemic life should be a good thing for United Utilities. Businesses reopening should boost consumption, but some of the added household demand should also stick around as working from home continues.”
“At the half-year results we’ll get some idea of how the two are balancing out and whether the group can expect elevated overall demand from here on out.”
She also said debt will be a key theme, as the groups continues to make necessary infrastructure investments: “As long as profit growth is also on the up this isn’t overly concerning, but it’s something to keep an eye on, particularly if inflationary pressure was stronger than anticipated.” (READ our full company preview here.)
Significant announcements in the week ending 26 November
Monday 22 November
Interims: Big Yellow Group (LSE:BYG)
Finals: Diploma PLC (LSE:DPLM)
Tuesday 23 November
Trading statement: Cranswick PLC (LSE:CWK), CRH PLC (LSE:CRH), Devro PLC (LSE:DVO), Reach PLC (LSE:RCH)
Interims: AO World PLC (LSE:AO.), Caledonia Investments (LSE:CLDN) PLC, Pets at Home Group, Severn Trent PLC (LSE:SVT), Telecom Plus (LSE:TEP) PLC
Finals: Compass Group (LSE:CPG) PLC, Avon Rubber PLC
Economic announcements: Manufacturing PMI (UK), Services PMI (UK), BoE’s Haskel Speech (UK)
Wednesday 24 November
Trading announcements: Breedon Group (AIM:BREE) PLC, Intertek Group PLC (LSE:ITRK), Rotork PLC (LSE:ROR)
Interims: HICL Infrastructure PLC, Johnson Matthey PLC (LSE:JMAT), United Utilities Group PLC (LSE:UU.)
Finals: AB Dynamics PLC (AIM:ABDP), Brewin Dolphin (LSE:BRW) Holdings PLC, Britvic PLC (LSE:BVIC), Virgin Money UK PLC (LSE:VMUK), Diploma PLC (LSE:DPLM)
AGMs: CVS, Genus, Renishaw
Economic announcements: Treasury’s autumn forecast statement (UK), GDP Annualised (US), Nondefence capital goods orders ex aircraft (US), Durable Goods Orders (US), FOMC minutes (US)
Thursday 25 November
Trading announcements: Hill & Smith PLC, Mears Group PLC (AIM:MER)
Interims: Eco Animal Health PLC, NewRiver REIT PLC (LSE:NRR)
AGMs/EGMs: Hammerson (LSE:HMSO)
Friday 26 November
AGMs/EGMs: Base Resources Ltd, Oilex Limited, Oncimmune Holdings PLC, Quadrise Fuels International PLC, ScS Group PLC, Sylvania Platinum Ltd
Economic announcements: CTFC GBP NC Net positions (UK)