Vodafone, Imperial Brands, Royal Mail and airlines to deliver key updates in coming week, UK inflati
The coming week will see a number of heavy hitters delivering updates or results, including mobile network Vodafone, tobacco group Imperial Brands, troubled mail carrier Royal Mail and budget airlines easyJet and Jet2.
The macro calendar will also have some flavour in the form of UK inflation and retail sales data on Wednesday and Friday respectively. There will also be news from the other side of the Atlantic with US inflation and jobless claims data.
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Vodafone Group PLC (LON:VOD) will report half-year results on Monday ahead of a capital markets event for analysts and investors the day after that will focus on the spin-off of its Vantage Towers business.
Back in July, the telecoms behemoth said the mobile towers business will be spun-off via an initial public offer in Frankfurt early next year, while also reporting a 1.3% fall in first-quarter revenue for the group as a whole.
A decline in roaming charges due to the pandemic hit mobile revenues around the world, with the UK, Italy and Spain lower but the group’s biggest market of Germany flat and South Africa up, while statutory service revenues were up 1.3%.
The second quarter could “mark a trough” in terms of European organic service revenue declines, analysts at UBS said, expecting investors to focus on the trajectory of service revenues from here on, plus any updates on the portfolio such as the towers spin-off.
A major focus for the company has been on net debts, which, inflated by the acquisition of Liberty Global’s European cable TV assets, at its March 30 year-end stood at around €42bn.
After a first ever cut to the dividend last year, Vodafone kept the final payment unchanged earlier this year and analysts are expecting this to continue this year, with an interim payout of 4.5 euro cents.
Imperial lights up with final figures
Dividends will be a big focus elsewhere on Tuesday as Imperial Brands PLC (LON:IMB) also puts out its final results.
New chief executive Stefan Bomhard, who joined at the start of July, last month promised he will “share some initial observations about the business” alongside the full-year results before he lays out a more detailed strategic update early next year.
The big tobacco group also revealed some headline numbers for the past year, including that revenues were up around 1% in the year to September 30 at constant currency rates, although earnings per share fell around 6% on a constant currency basis.
“Shareholders in Imperial Brands will be hoping that October’s trading statement draws a line under a dreadful 12-month span that featured two profit warnings, a sudden change of chief executive, a dividend cut and a slump in the share price,” said analysts at AJ Bell.
One area that Bomhard, who had been in charge of car dealership group Inchcape for the past five years, will be looking at it is the poor performance of the group’s next-generation products (NGPs), including its Blu vaping range, Pulze heat-not-burn tobacco and Skruf snus.
Analysts at RBC Capital Markets have suggested another novel strategy, saying that if the company’s copious cash flow was used for bigger share buybacks the company could buy back its current market value within seven years.
easyJet, Jet2 to land results
Investors in airlines are all hoping the same thing, namely to see some reassurance on how the airline will weather a rough winter.
Travel stocks were lifted by the positive news on Pfizer’s COVID-19 vaccine, but it’s not enough to restart the struggling travel sector, though it has given a boost in confidence that flights will resume sooner rather than later.
The market will look at the flight schedule for the winter months and potential forward bookings for next summer.
“The crisis forced easyJet to make the descent into its first ever loss and it forecast that it would still only be able to fly a quarter of planned capacity in the first few months of 2021,” analysts at Hargreaves Lansdown noted.
“However, the relief that a vaccine will soon be rolled out is likely to increase customer confidence and the airline will certainly be hoping it will lead to a surge in bookings for the crucial spring and summer period.”
For UBS, easyJet’s full-year revenues should come in at £3bn, against consensus of £2bn and down from last year’s £6.3bn, with a loss before tax of £822mln.
Experian reports interims in shadow of GDPR troubles
Interim results on Tuesday from consumer credit group Experian PLC (LON:EXPN) may see data protection in focus after a ruling by the UK Information Commissioner’s Office found the company had breached GDPR rules in its UK marketing business, which could incur a hefty fine if not resolved.
While this issue highlights the risks of data handling, the company is continuing to expand its data mining operations into areas such as automotive and healthcare, although loan decisions remain its core business, which may become an issue during the economic downturn as banks become more reluctant to lend, dampening demand for the firm’s services.
However, the company is expecting to do better than previously expected, raising its full year outlook in September after a better second quarter. The outperformance was attributed to the US mortgage market which bodes well as it indicates the firm’s data services will become more important for decisions in the sector.
Meanwhile, costs will also be a key area of focus in the results, particularly with legal costs potentially eating away at the firm’s margins.
Analysts at UBS are forecasting first half revenues of US$2.55bn with earnings (EBITA) of US$652mln.
British Land to unveil damage of remote working
The working from home boom during lockdown has hit office owners such as British Land Co PLC (LON:BLND) hard, and with the trend of remote working unlikely to be reversed soon even with a coronavirus vaccine potentially on the horizon, the group’s portfolio will continue to be held back and the strategy going forward will be closely eyed in its interim results on Wednesday.
Around half of the desks in the firm’s offices are currently occupied and rental rates may start to take a hit if home working persists into the long term, however, rent collection appears to be staying strong while the rise of click and collect shopping have improved the firm’s retail portfolio.
However, on the flipside, the digital shopping boom is denting the company’s interests on the high street, where footfall has contracted due to the pandemic, and with many businesses going bust it may be hard to refill empty properties even after the crisis is over.
With this in mind, the company is likely to consider cutting rents to well below pre-pandemic levels to draw in tenants, which will, in turn, cause a knock on effect to the value of its assets. This will be reflected in the company’s net asset value (NAV), and with the shares currently trading at a 40% discount to its last NAV it seems investors are not optimistic.
Royal Mail to post results
On Thursday, Royal Mail Group plc (LON:RMG) is posting the results for the half-year to September 27.
UBS expects adjusted operating profit to come in at £3mln, against the £9mln per consensus forecast, with a loss of £143mln in UK parcels, international and letters, with GLS delivering underlying earnings (EBIT) of £146mln.
The second half is expected to see group EBIT of £81mln, with profits rising to £373mln in 2022.
Investors will focus on updates on the discussions with the unions, the magnitude of the profit improvement compared to past guidance and the stickiness of parcel volumes into financial year 2022.
“The big blot on the copybook is the sharp decline in letter volumes. There has also been an under investment in automation which means that Royal Mail is in many ways playing catch up with the competition, even though it’s in the dominant position as the UK’s universal postal provider,” analysts at Hargreaves Lansdown said.
“Adapting with flexibility isn’t Royal Mail’s strong point, but it will need to be much more nimble to keep abreast of its customers changing needs.”
“Coronavirus costs will have significantly eaten into profits, but Royal Mail’s reputation has arguably been boosted during the pandemic with staff praised for going the extra mile to keep the essential service running.”
Kingfisher eyes another lockdown boost
A trading update from B&Q owner Kingfisher PLC (LON:KGF) on Thursday is likely to be eyed for its forecasts as a second UK lockdown heralds a positive demand shift for the DIY products retailer as a return to remote working gives customers more time to pursue home projects.
With the firm’s outlets designated as essential and thus likely to remain open during lockdown, the closure of other stores will likely draw in more customers, as will its large, car accessible warehouses that offer ample space for socially distanced shopping.
Investors will likely be on the lookout for any updates on initial trading over the new lockdown period, while further ahead they will likely look for any plans on how the firm will spend the £73mln gained from the sale of its Castorama Russia business in early October.
UK economic data next week includes inflation numbers on Wednesday and retail sales on Thursday from the Office for National Statistics, plus Rightmove house prices on Monday and GfK consumer confidence on Friday.
The latest ONS infection survey next week should show early effects of the nationwide lockdown in England, after the past week showed estimated case numbers still rising, albeit at a modest pace at the end of October.
Brexit talks will resume in Brussels in the coming week after a Downing Street spokesman said on Friday that talks had been paused over the weekend and next week, with “differences” still remaining in trade talks on a level playing field and fisheries.
Overseas, big events include an EU leader summit and US jobs numbers on Thursday, and perhaps a People’s Bank of China monetary policy meeting on Friday.
Significant announcements expected for week ending 20 November:
Monday November 16:
Interims: Vodafone Group PLC (LON:VOD)
Tuesday November 17:
Interims: Experian PLC (LON:EXPN), AdEPT Technology Group PLC (LON:ADT), Assura PLC (LON:AGR), Big Yellow Group PLC (LON:BYG), Gear4music Holdings PLC (LON:G4M), Homeserve PLC (LON:HSV), Intermediate Capital Group PLC (LON:ICP), Palace Capital Plc (LON:PCA), Redcentric PLC (LON:RCN), Scapa Group PLC (LON:SCPA), Schroder REIT Ltd (LON:SREI), System1 Group PLC (LON:SYS1), Telecom Plus PLC (LON:TEP)
Economic data: US retail sales, US production
Wednesday November 18:
Finals: UK inflation
Thursday November 19:
Interims: Royal Mail PLC (LON:RMG), CMC Markets PLC (LON:CMCX), Jet2 PLC (LON:JET2), Halma PLC (LON:HLMA), Charles Stanley Group PLC (LON:CAY), Investec PLC (LON:INVP), Johnson Matthey PLC (LON:JMAT), Mitie Group PLC (LON:MTO), Naked Wines Plc (LON:WINE), Polar Capital Holdings PLC (LON:POLR), SRT Marine Systems PLC (LON:SRT), Syncona Limited (LON:SYNC), LondonMetric Property PLC (LON:LMP)
Economic data: US jobless claims, UK CBI Industrial Trends
Friday November 20:
Finals: Sage Group PLC (LON:SGE)
Economic data: UK retail sales, UK GfK consumer confidence