Companies announcing results next week

Graham Spooner, investment research analyst at The Share Centre, gives his thoughts on what to expect from companies announcing their results next week, the week beginning 31 October 2016.

Companies announcing results next week
Monday

WPP (Q3 results)

WPP is the bellwether of the advertising industry and as such is widely regarded as a global economic barometer. It offers a wide range of exposure to both digital media and global markets. Investors will appreciate that the firm got a boost from the EU Referendum result and subsequent weakening of Sterling. The group reported further good sales growth news in the second quarter and confirmed its full year guidance for a 3% increase in revenue and sales growth.

Companies also reporting today include: DS Smith (trading update)

Tuesday

BP (Q3 results)

The shares are close to their levels of mid 2014 when oil prices were above $100 a barrel. This demonstrates how well restructuring and cost cutting has gone in a climate where oil prices are currently less than half of what they were then. Interested investors should note that management have indicated that production levels for 2016 are likely to be similar to last year, however the moderate rise in oil prices in Q3 compared to the first half should help it report comparatively better sales and profit figures. The upstream exploration and production businesses should report another quarter of profits. Despite a modest recovery in oil prices the group should not be complacent and management will continue on the programme of cost cutting, reducing capital expenditure and streamlining the business. The dividends remain attractive and pressure to cut it should be alleviated.

Royal Dutch Shell (Q3 results)

With a moderate pickup in average oil prices in the third quarter compared to the first half we should expect to see this reflected in higher revenues and profitability. However, cost cutting and streamlining of the business will be an ongoing feature and we could still see some asset write-downs. Investors will expect an update on the integration of the BG acquisition and whether it should still expect annual cost synergies of $2.5bn per annum and whether there have been any further divestments, especially in Nigeria and the US as previously indicated. The dividends should remain unchanged.

Companies also reporting today include: Standard Chartered (interim management statement) and Shire (Q3 results)

Wednesday

Next (Q3 trading update)

In September the clothing retailer reported better than expected interim results but revealed that it made more price reductions in its high street stores than analysts had forecast. The market will be watching that area again carefully in these third quarter figures. The weakness in Sterling in recent months will also lead to a focus on Next’s margins. The market and investors will be interested by the group’s progress with the plan to open larger stores. Furthermore, given the company’s previous downbeat comments on expectations for this year any comments on full year profit forecasts will also be noted by the market.

Companies also reporting today include: Persimmon (Q3 trading statement)

Thursday

Inmarsat (Q3 results)

The company and the sector have come under some pressure lately as spending by governments and customers seem to have moderated. However, the company reported a better set of Q2 numbers and investors hope that this momentum continued into the third quarter. The group generates most of its sales overseas so there should be a positive currency impact after sterling’s fall since the referendum. However, key for sentiment towards the company is whether customer’s adoption of new satellite technologies is gathering momentum such as in-flight broadband. 

Morrison (Wm) (Q3 trading statement)

The market will be interested to see if the supermarket group can make it to four consecutive quarters of like-for-like sales growth. The shares have performed very strongly so far this year although they have only recovered to where they were in 2014. Interim results in September beat expectations which further underlined a sense that the group is seeing sustained recovery. However, the competition in the sector remains fierce, especially with a revived Tesco and the discounters Aldi and Lidl.

Tate & Lyle (Q2 results)

Investors should expect the recovery in the group’s fortunes to continue after its restructuring and its focus on the food ingredient’s business. This is a growing market and the group is further penetrating into the emerging markets. Its Bulk Ingredients business is doing well while there is hope for a volume recovery Specialty Foods. It should be a big beneficiary of sterling’s fall since about three quarters of revenues are dollar based. Its ethanol business hasn’t been doing well, partly due to lower energy prices in general but there could be some hope in the latest quarter.

Companies also reporting today include: Schroders (interim management statement), Glencore (Q3 production report), 3i (Q2 results), Croda International (trading update), Coca-Cola HBC (Q3 trading update), Randgold Resources (Q3 results), RSA Insurance Group (interim management statement), Smith & Nephew (Q3 trading update)

Friday

Paddy Power Betfair – Q3 trading update

The betting and gaming group entered the FTSE 100 index in March this year but has underperformed the index since then so some good news for investors in this update would go down well. Interim results in August showed second quarter revenues boosted by the Euro 2016 football championship and all four divisions saw good increases in sales in the first half. With the two parts of the merged group still integrating any update on the level of expected savings will be of interest, as will comments on full year profit guidance, previously forecast to be £365m-£385m.

Announcements for the w/c 31 October: 

1, 2 and 3 November, Purchasing Managers Indexes, for UK manufacturing, construction and services  

Last month, the PMI covering manufacturing rose to 55.4, the highest reading since June 2014. The PMI covering construction jumped nicely, rising from 49.2 to 52.3, but the Services Business Activity index fell a little, from 52.9 to 52.6, although it was still above the 50 no-change mark. Collectively, the three indexes pointed to growth in Q3 of around 0.3%.

2 November, Federal Open Market Committee Meeting, Two-day meeting – Fed and 4 November, US Employment Situation – Bureau of Labor Statistics

It is widely thought that the Fed will increase interest rates before the end of this year, but it is not likely to do so just a few days before the US election. As for the jobs report, in September, non-farm payrolls rose by 156,000, which was seen as a little disappointing. Will this week’s report, coming as it does just days before the US election, contain good or bad news? If recent US PMIs and consumer confidence indexes are any guide, it should be good news.

3 November, Monetary Policy Committee Announcement and Minutes and Inflation Report – Bank of England

The Bank of England is unlikely to announce any significant change in monetary policy today, but what will the Inflation Report say about the likely impact of the falling pound on UK inflation next year and the year after? Many analysts expect inflation to top 3% next year, before falling.

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