Monday: Clarkson results to be buoyed by structural trends
For all the challenges and geopolitical uncertainty of 2022, on Monday shipping firm Clarkson is expected to confirm a stronger than expected 2021,
“We believe the structural trends are not likely to change materially in FY22, where we expect solid growth in demand for shipping, as we hope that Covid restrictions will be removed and economic growth can recover further,” stockbroker Peel Hunt said in a note.
“We forecast the Clarksea index to increase from c.$28,500 average in FY21 to $33,000 in FY22E.
“However, we believe this is a conservative assumption, as Chinese coal imports rise after the Winter Olympics in February 2022, forcing dry bulk indices higher, a trend already clearly visible, and we expect demand for tankers to recover as OPEC+ oil production expands by 0.4m bpd every month, such that by September 2022, output and seaborne non-sanctioned oil should be at the same level as pre-pandemic.”
Tuesday: Currie on the menu at Greggs
It’s all change at the top of sausage roll and coffee group Greggs PLC (LSE:GRG) with a new chief executive in the shape of Roisin Currie.
To be accurate, Currie joined the board in February as CEO designate after twelve years as head of retail and does not take over fully until Roger Whiteside departs after May’s AGM but Tuesday’s full year results will give a flavour of what’s to come.
Whiteside will be a tough act to follow and indeed he has left his successor targets until 2026 described by broker Shore Capital as "demanding".
Sales of £1.23bn for the 52 weeks ended 1 January, up from £811mln the year before, have already been flagged so interest will be focused on how margins are being affected by rising raw material costs and the impact of the return to work now that Covid restrictions have been lifted.
Elsewhere, favourable results are expected by UBS when insurer Direct Line Insurance Group PLC (LSE:DLG) releases results on Tuesday, with pre-tax profit forecast at £469mln. The Swiss bank meanwhile forecasts a £325mln underwriting result, up from £268mln.
UBS has a ‘buy’ rating for the insurer, with a 33p target.
Ready-meal maker Bakkavor also reports Tuesday, and, amid a rising cost environment its expected - by stockbroker Peel Hunt – to show a strong performance along with a material improvement in net debt.
“Our forecasts for the current year take into account the material increase in costs and inevitable timing for price increases to benefit, the stockbroker said in a note. “Some of the other consensus forecasts have yet to include these costs, so we expect numbers at the top end of the range to move towards our level.”
Wednesday: Ibstock earnings in focus
Ibstock will release full year earnings on Wednesday, with the brickmaker’s cost-cutting exercises and status as a supplier expected to protect it from excessive inflationary pressures. `Housing demand went through a purple patch during the Covid pandemic as the race for space intensified the demand for turn-key homes outside of major cities.
It allowed house prices to rise more than 10% last year, but costs have also begun to spiral, with construction output prices rising 6.2% in the 12 months to December, according to the latest data from the ONS.
While cost inflation could soon outstrip prices, Hargreaves Lansdown believes Ibstock should be shielded from immediate inflation risks, thanks to targeted £20mln of cost-saving in 2021, and the ability to pass on rising costs to builders.
Hargreaves Lansdown expects full year revenues to have grown 29% to £409mln against 2020, with underlying cash profits of £93mln slightly ahead of previous guidance.
“Supplying the bricks used for building houses, rather than selling the houses themselves, provides some shelter from a drop in housing demand,” said Matt Britzman, equity analyst at Hargreaves Lansdown.
“Nevertheless, we’ll be keen to hear any commentary on how demand from housebuilders is holding up.”
Elsewhere, investors can expect an update on new business segment Ibstock Futures, which is using £50mln to build the UK’s first brick slip factory.
Thursday: DS Smith investors eye out impact of costs and sanctions
Shareholders in DS Smith PLC (LSE:SMDS) will be eagerly awaiting the release of the company’s third-quarter trading update next Thursday to see if Russian sanctions will have any impact on its performance.
According to Sophie Lund-Yates, an equity analyst at Hargreaves Lansdown, although the company doesn’t directly operate in Russia, “the full effect of economic sanctions is hard to predict”, and the update should provide clarity on any potential impact.
The packaging firm benefitted from large amounts of demand in its report in September that offset some of the higher costs associated with producing and transporting paper. Lund-Yates adds that increasing input costs is another thing investors will be keeping an eye out for.
Inputs costs have been on the rise for a while, but DS Smith has benefited from increasing its own prices without seeing a drop-off in demand. However, “there is a point at which higher prices could start to eat into volumes though and we’ll be looking to make sure the group hasn’t reached this tipping point.”
Shares in the company have been on decline over the last six months, with it currently changing hands at 296p, down 34% on the 449p it was trading at in September.
Capita investors hope for positivity after tumultuous start to 2022
The outsourcing group left the FTSE 250 in this week’s reshuffle after seeing its share price contract nearly 40% in the year to date.
Investors will be keeping an eye on the progress of Capita’s troubled turnaround saga, which began in 2018 with a £720mln restructuring budget with Capita saying it would need another £80mln in March of 2020.
The company is in a disposals spree which included the £62mln sale of its software division in October and the £380mln sale in June of its 51% stake in Axelos, with a target of £700mln of disposals in 2021 and the first half of 2022
“Outsourcer Capita has been trying to streamline its operations and cut debt by offloading parts of its portfolio but that’s not stemmed the loss of confidence,” said Hargreaves Lansdown’s Susannah Streeter this week.
“After years of declining revenues due to a loss of contracts, the restructuring drive has yet to reap rewards, disappointing investors with a significant turnaround not yet in sight.”
Friday: GDP and Berkeley
Berkeley Group Holdings PLC (LSE:BKG) has had a good run over the last few years but having come through Covid relatively unscathed a few more headwinds are starting to blow.
The London and south-east builder will have to deal with a rising interest rate environment for the first time in years, cladding remediation remains an unknown while material and staffing costs are rising.
Berkeley raised its annual guidance by 5% with its interims and brokers are pencilling in £544mln against £518mln for the full year, something likely to be reiterated at this third-quarter update.
In December, the group also reaffirmed its commitment to returning £282mln per year to shareholders up to 30 September 2025 and that any surplus cash would also be handed back and it would be a major shock if that too is not underlined.
There will also be plenty of macro data on Friday, including the UK gross domestic product (GDP) estimate for January from the Office for National Statistics.
The IMF decreased its UK 2022 GDP growth forecast to 4.7% from 5.0% in its most recent January forecast, while the Office for Budgetary Responsibility predicts 6% GDP growth this year.
Last year GDP rebounded by an estimated 7.5% following the 9.4% fall in 2020 when the pandemic sent shockwaves across the global economy.
“The UK economy is expected to have shown signs of a bounce back from the Omicron effect when the latest growth numbers are released, but there are concerns that the conflict in Ukraine could weigh on the economy going forward,” said Susannah Streeter, senior investment and market analyst Hargreaves Lansdown.
“The indications are that the invasion and sanction repercussions are more likely to add to inflationary pressures by more than it reduces growth, so the Bank of England is still expected to raise rates at the next policy meeting.
“These latest numbers will shine a light on just how robust the UK economy is to survive a fresh period of uncertainty and price pressures,” Streeter added.
Major announcements expected in the week of 7-11 March 2022
Monday
Finals: Clarkson PLC (LSE:CKN), Downing Renewables & Infrastructure Trust (LSE:DORE) PLC, MTI Wireless Edge
Interims: Physiomics PLC (AIM:PYC)
Economic data: Consumer Credit (US), Halifax House Price Index (UK)
Tuesday
Finals: Bakkavor Group PLC (LSE:BAKK), Bango PLC (AIM:BGO, OTCQX:BGOPF), Capital & Regional PLC (LSE:CAL), Capricorn Energy PLC, ConvaTec Group PLC (LSE:CTEC), Direct Line Insurance Group PLC (LSE:DLG), Domino’s Pizza Group PLC, ENGAGE XR Holdings PLC, Fresnillo PLC (LSE:FRES), Glenveagh Properties PLC (LSE:GLV), Greggs PLC (LSE:GRG), Gresham Technologies plc (LSE:GHT), H&T Group PLC (AIM:HAT), Johnson Service Group plc (LSE:JSG), Keller Group PLC (LSE:KLR), M&G PLC (LSE:MNG), Made.come Group PLC, Midwich Group PLC (AIM:MIDW), Robert Walters PLC (LSE:RWA), Wood Group (John) PLC, IWG PLC (LSE:IWG)
Trading announcements: Ashtead Group Plc (LSE:AHT)
AGMs: Caretech Holdings PLC, Driver Group (AIM:DRV) PLC, RedX Pharma PLC, Schroder European Real Estate Investment Trust PLC
Economic data: Wholesale Inventories (US)
Wednesday
Finals: 888 Holdings PLC (LSE:888), Alfa Financial Software Holdings Ltd, Breedon Group Plc (AIM:BREE), Foresight Solar Fund Ltd (LSE:FSFL), Headlam Group (LSE:HEAD) PLC, Ibstock PLC (LSE:IBST), Legal & General Group PLC (LSE:LGEN), Network International Holdings, Prudential PLC (LSE:PRU), Quilter PLC (LSE:QLT), Somero Enterprises Inc, STV PLC, Biffa PLC (LSE:BIFF), Ibstock PLC (LSE:IBST), Tullow Oil
Interims: Kier Group PLC (LSE:KIE), Thinksmart Ltd
AGMs: MTI Wireless Edge
Economic data: MBA Mortgage Applications (US), Crude Oil Inventories (US), Retail Sales (UK)
Thursday
Finals: Balfour Beatty plc (LSE:BBY), Hill & Smith Holdings PLC (LSE:HILS), Just Group PLC (LSE:JUST), National Express Group PLC (LSE:NEX), Savills PLC (LSE:SVS), Secure Income REIT PLC (AIM:SIR), Spirax-Sarco Engineering (LSE:SPX) PLC, Spirent Communications (LSE:SPT) PLC, Capita PLC (LSE:CPI)
Trading update: DS Smith PLC (LSE:SMDS)
Interims: Brooks Macdonald Group plc (LSE:BRK), Volution Group PLC (LSE:FAN)
AGMs: BMO Capital and Income Investment Trust PLC (LSE:BCI)
Economic data: Consumer Price Index (US), Continuing Claims (US), Initial Jobless Claims (US), RICS Housing Market Survey (UK), Balance of Trade (UK), Gross Domestic Product (UK), Index of Services (UK), Industrial Production (UK), Manufacturing Production (UK)
Friday
Finals: Sig PLC
Trading announcements: Berkeley Group Holdings PLC (LSE:BKG)
AGMs: Hardide PLC (AIM:HDD), Myanmar Investments (AIM:MIL) International Ltd
Economic data: U. of Michigan Confidence Prelim (US)