London's financial calendar is a packed one next week, with BP, Ocado, GlaxoSmithKline, AstraZeneca, Unilever, British American Tobacco and Barratt among the names reporting.
Although the trillion-dollar boys have had their say, don’t think the US earnings season has finished either, with a further 83 companies in the S&P 500 reporting, including Disney, Pfizer, Peloton and PepsiCo (NASDAQ:PEP).
In macroeconomics news, inflation numbers will be closely scrutinised, with geopolitics also likely remain in the headlines given tensions over Ukraine.
TUESDAY 8 FEB
BP presses repeat
After a quieter Monday, things step up on Tuesday with several FTSE 100 giants, including BP.
If investors want to know what to expect from BP PLC (LSE:BP.) on Tuesday – they should probably look at Shell’s numbers from this past week.
Like Shell, BP is expected to show a substantial upturn in profits mostly thanks to higher oil prices.
A sixfold increase in net income is predicted by the market for the fourth quarter, up from just US$968mln in the same period a year ago whilst the price of crude languished.
With all that cash sloshing around investors will closely eye-ball returns whether that’s dividends or buybacks.
They’ll want to an update on the company’s much talked about transition and ‘net zero’ goals.
From the outside of the company no doubt there’ll be more noise among those calling for windfall taxes.
Dani Hewson, analyst at stockbroker AJ Bell, in a note this week highlighted: “with BP just days away from its trading update questions about whether a windfall tax is a viable solution to the current energy crisis will hang around,” Hewson added.
“Of course, it’s not a straightforward argument, both businesses have a duty to their shareholders, the people who bankroll their operations in good times and in bad.”
Ocado’s robot wars
Shares in Ocado Group PLC (LSE:OCDO) are down almost 10% so far this year and roughly 50% lower over the past 12 months - but over the past five year are still up over 450%.
Last month management gave a presentation that, under the banner of 'Ocadao Re:Imagined', boasted that a new faster, cheaper and lighter 600 Series bot, a new robotic arm and improvements to its automated despatching system could help reduce labour costs by 40% in the long term.
While it didn’t do much for the shares, analysts at Credit Suisse were so impressed they effectively moved from a sell to a buy recommendation, seeing the new tech leading to more fruitful partnership deals with bricks-and-mortar supermarkets.
Full-year results from the FTSE 100 group on Tuesday are expected to be "uneventful", the investment bank thought.
However the shares could be sent even lower, if future financial guidance is revised down, while the analysts admitted there are risks remaining about the persistent legal battle with rival Autostore.
WEDNESDAY 9 FEB
GSK under plenty of scrutiny
GlaxoSmithKline PLC (LSE:GSK) and larger rival AstraZeneca remain sector peers but can no longer be spoken of as equals with the former £82bn and the latter £130bn.
The underperformance of GSK has put a lot of pressure on Emma Walmsley, the drugs giant’s chief executive officer, so some good news in Wednesday’s full-year results would be most welcome.
The market liked that the company stuck to its guns in rejecting the approach from Unilever, which was interested in buying the consumer healthcare business GSK owns in partnership with Pfizer and there has also been more good news flow recently in the form of a US$1.25bn payment from competitor Gilead Sciences after a settlement over GSK’s HIV drug patents.
The market has pencilled in £33.99bn for revenue, little changes from the year before, and profit before tax of £7.97bn, up 47.4%.
Barratt reverting to old normal?
Barratt Developments PLC (LSE:BDEV) is scheduled to publish half-year results on Wednesday with analysts expecting weaker revenues this year, with sales expected to cool off further in coming months.
We last heard from the FTSE 100-listed housebuilder in October, when it reported a slowing of net reservations since the start of July, with average selling prices (ASP) up but completions down amid building material supply challenges.
UBS expects a “downward normalisation” in volumes given the elevated levels in the mini-boom a year earlier as part of the post lockdown catch-up, with volumes expected to drop 14% and ASP to rise 6%, resulting in revenues being down 10% on the year before.
‘’House builders are vulnerable to rising interest rates and that nervousness has been seeping through the sector, and Barratt Developments has been far from immune,” said Susannah Streeter, analyst at Hargreaves Lansdown.
Not Dun sellin’
Dunelm Group PLC (LSE:DNLM) is set report is half year results on Wednesday, with the home furnishings retailer raising its full year guidance for profit before tax back in September and reiterating its in October despite supply chain disruptions.
As ever, the interims are a good chance for investors to see if the company is on track to achieve its targets, with .£140mln the guided half-year PBT mark
The home improvement and homeware markets were among the handful of areas that benefitted from lockdowns, with consumers eager to revamp their homes.
However, recently announced government interest and national insurance rates, alongside soaring energy bills, although not relevant to the half year results, may impact guidance as cash strapped homeowners may begin to prioritising spending.
Broker Peel Hunt said it is not expecting an update on current trading but rather for management to set out “greater levels of customer insights in terms of active customer growth and share of wallet”, with perhaps confirmation of the “raft” of planned enhancements coming for the business in 2022.
THURSDAY 10 FEB
What now for AstraZeneca?
Coming the day after its former larger rival, AstraZeneca PLC (LSE:AZN) reports following the closure of its Alexion acquisition halfway through last year.
One of the areas of focus may be “what next?” for vaccines, with the company’s good deeds in helping ramp up production and distribution of the Oxford University coronavirus vaccine not going unpunished by markets in the early part of last year but with the shares now (modestly) higher than before the pandemic.
While chief executive Pascal Soriot has said he has no regrets over getting involved in vaccines, the head of the company’s biopharma division said a “big strategic question is under discussion” on whether it is a treatment area that the company wants to move into.
For now, the City number crunchers will be mainly concentrating on the performance of the underlying business, said UBS.
“Top-line momentum remains key for investors,” the analysts said, as well as its oncology growth drivers – Tagrisso, Lynparza and Imfinzi, which were below consensus expectations in the third quarter.
The trajectory of blood cancer drug Calquence will “continue to be of interest, reflecting how the positive top-line data from the head-to-head trial with Imbruvica translates into prescription uptake”.
Unilever boss under extra pressure
Changes are afoot at household goods giant Unilever PLC (LSE:ULVR) – the question is whether the current management will be in place to carry them through.
After years of the shares going nowhere, the final straw for many investors was the offer to buy Glaxo’s consumer arm for £50bn last month, which was hastily pulled after a fierce backlash.
Alan Jope, the Anglo-Dutch business’s chief executive, has proposed a plan to regroup around the fastest growing brands and buy new ones, but with veteran US corporate raider Nelson Peltz now on the shareholder roster he might need to pull another rabbit out of the hat.
Consensus forecasts are for Thursday’s full year numbers to show sales of €52bn, a 4% rise on an underlying basis with underlying operating profits of €9.5bn.
How Unilever is dealing with cost inflation will be another point of interest.
US inflation in the spotlight
The US consumer prices index for January will be “one of the biggest highlights” of the week, said Deutsche Bank.
This is because it will be the penultimate inflation print ahead of the Federal Reserve’s next meeting, in March, at which they’re widely expected to raise interest rates for the first time since 2018.
“However, the Fed and consensus forecasts have been repeatedly surprised by the strength of inflation over the last year, and it’s worth noting that eight of the last 10 CPI releases have seen the monthly headline figure come in above the consensus estimate,” the Deutsche economists said.
Monthly headline CPI growth is expected to slow to +0.4% in January from 0.5% last time, with Deutsche forecasting 0.3%, which would be the slowest monthly pace since August.
Headline annual inflation is estimated to step up to 7.3% from 7.0%, while core inflation, excluding food and fuel, climbs to 5.9% from 5.5%.
FRIDAY 11 FEB
BATS is smoking
In spite of ever-fiercer pushback from investors and regulators for tobacco companies, British American Tobacco PLC (LSE:BATS) is the fifth-best performer in the FTSE 100 in 2022.
“This is partly due to the gathering inflation narrative,” said analysts at AJ Bell. “Tobacco is relatively price inelastic and despite bans on advertising and packaging in many markets producers still have brands which resonate with their customers. This means that tobacco firms may be better placed than most to defend margins and cash flow if inflation runs hotter than expected for longer than expected.”
On top of that, chief executive Jack Bowles upgraded expectations for earnings at the first-half stage and in December announced cigarette volumes be flat rather than falling 1.5% as previously expected, and that group revenues would rise at least 5% on a constant currency basis, above the long-term target of 3% to 5% a year.
With £1bn in cost cuts achieved ahead of schedule of a targeted £1.5bn, BAT is expected to deliver adjusted earnings per share of 325.5p versus 331.7p a year ago.
And a fourth quarterly dividend of 53.9p is also predicted, in keeping with management’s plan to pay 215.6p per share in dividends and distribute 65% of profits.
UK growth
The fourth quarter of 2021 had been shaping up to be a reasonably decent quarter until the Omicron wave broke over the UK economy in December.
Economist expectations are for the UK economy to slow sharply relative to Q3’s 1.1% gain.
Looking at the monthly GDP numbers, the UK economy expand 0.2% in October, and then in November stepped up to 0.9%, driven by rebounds in consumer spending as well as industrial production and construction output.
Economists expect a 0.5% decline in December.
"The big question is how much of this November rebound in manufacturing and construction carried over into December, and whether it was enough to offset the collapse in retail sales which fell by -3.6%, more than wiping out the collective 2.7% gain seen in October and November," said Michael Hewson at CMC Markets.
Major announcements expected for 7-11 Feb
Monday 7 February
Trading announcements: Lamprell PLC (LSE:LAM, OTC:LMPRF)
Economic data: Halifax House Price Index (UK), Consumer Confidence (US)
Tuesday 8 February
Trading announcements: Bellway PLC (LSE:BWY), TUI AG (LSE:TUI), SSE PLC (LSE:SSE)
Interims: Alumasc Group PLC (AIM:ALU), Filtronic PLC (LSE:FTC), Mattioli Woods PLC (AIM:MTW)
Finals: BP PLC (LSE:BP.), Micro Focus International plc (LSE:MCRO), Ocado Group PLC (LSE:OCDO)
AGMs- Barkby Group PLC, Numis Corporation (AIM:NUM), TUI AG (LSE:TUI)
Wednesday 9 February
Trading announcements: DiscoverIE Group PLC, Grainger Plc (LSE:GRI), GlaxoSmithKline PLC (LSE:GSK), Lancashire Holdings
Interims: Barratt Developments PLC (LSE:BDEV), Dunelm Group PLC (LSE:DNLM), PZ Cussons (LSE:PZC)
Finals: Lancashire Holdings, Smurfit Kappa Group plc (LSE:SKG)
AGMs: Contango Holdings (LSE:CGO) PLC, Euromoney Institutional Investors PLC, Finsbury Growth Income Trust PLC, Grainger Plc (LSE:GRI), Inspirit Energy Holdings PLC (LSE:INSP), JPMorgan Asia Growth and Income PLC, Oxford Metrics (LSE:OMG) PLC, Schroder UK Mid Cap Fund PLC
Economic data: Retail Sales (UK), MBA Mortgage Applications (US), Wholesale Inventories (US), Crude Oil Inventories (US)
Thursday 10 February
Trading announcements: Watches of Switzerland Group PLC (LSE:WOSG)
Interims: Ashmore Group PLC (LSE:ASHM), MJ Gleeson (LSE:GLE), Redrow PLC (LSE:RDW)
Finals: AstraZeneca PLC (LSE:AZN), RELX PLC (LSE:REL), Unilever PLC (LSE:ULVR), Beazley PLC
AGMs: Benchmark Holdings PLC (AIM:BMK), easyJet PLC, Tritax Eurobox PLC (LSE:EBOX)
Economic data: RICS Housing Market Survey (UK), Balance of Trade (UK), GDP Preliminary (UK), Gross Domestic Product (UK), Index of Services (UK), Industrial Production (UK), Manufacturing Production (UK), Consumer Price Index (US), Continuing Claims (US), Initial Jobless Claims (US)
Friday 11 February
Trading announcements: Tate & Lyle (LSE:TATE) PLC
Finals: British American Tobacco PLC (LSE:BATS)
AGMs: Mineral and Financial Investments Ltd, Polar Capital Global Healthcare Trust PLC (LSE:PCGH), Victrex
Economic data: GDP Preliminary (UK), U. of Michigan Confidence (Prelim) (US)
US earnings reports
Tuesday: Lyft, Pfizer, Peloton, Warner Music
Wednesday: Disney, Uber
Thursday: Coca Cola, PepsiCo (NASDAQ:PEP), Philip Morris International and Twitter