Graham Spooner, Investment Research Analyst at The Share Centre, gives his thoughts on what to expect from companies announcing results week commencing 21 August 2017.
BHP Billiton (Q4 results)
The most diversified of the large mining companies should report full year results that demonstrate the turnaround the sector is having from slightly improved commodity prices.
The key driver to the bottom line will be the streamlining and restructuring the company has made over the last few years along with the absence of major asset writeoffs. More interest will be paid to further restructuring plans and the dividend policy that management will announce, especially given its rivals have been improving their payouts. Attention will also be on its North American energy business where activist investors have raised their stakes in BHP, to push management to sell these off.
We currently list BHP Billiton as a BUY
Persimmon (Q2 results)
Just like many of its peers, we should see revenues climb by double percentage points on the back of increased completions and slightly higher average house prices. However, commentary on current market activity will be keenly followed as concerns mount over the economic health of UK consumers. Nonetheless, we should still see a rising order book and management planning ahead for resilient demand as housing is still in shortage and mortgage interest rates remain attractive and accessible. On the cost front, we are likely to hear of mounting pressures of rising material prices and the availability of skilled labour.
We currently list Persimmon as a HOLD
Companies also reporting today: Antofagsta (Q2 results) – HOLD
Costain (Q2 results)
The company is involved in some high profile projects such as Crossrail. The last update in July stated that trading had been strong, so investors will not be expecting too much in the way of change. Improving the infrastructure system in the UK is something that the majority of political parties agree on and any comments from management regarding future projects will be worth noting.
We currently list Costain as a BUY
WPP (Q2 results)
The share price performance year to date has been lack lustre, following on from cautious comments earlier in the year. Followers of the group will be casting an eye over its performance in the US and emerging markets, where revenue growth has been slowing. As the bellwether of the advertising industry comments, the future outlook will be important as will the growth for digital media.
We currently list WPP as a BUY
Announcements w/c 21 August 2017:
24 August, second estimate of UK GDP, Q2 2017 – Office for National Statistics (ONS)
According to its first estimate, the ONS recorded a growth rate in UK GDP of 0.3% in Q2, 0.1 percentage points higher than in Q1, with only Finland and Portugal in the EU growing at a slower rate – at least that applies to the countries for which we currently have data. However, many economists expected the growth rate to be slower than that, and the ONS does have a habit of revising its data, often downwards, on subsequent occasions. Will it do so this time around?
24 August, Quarterly Distributive Trades – Confederation of British Industry (CBI)
Last month, according to the CBI, retail sales performed much better than expected, the headline index posted a net balance of plus 22, compared to just plus 3 in June. But the data from the ONS on retail sales is less encouraging, and although inflation continues to be less than expected, real wages are still seeing sharp falls at the moment, which will put retail sales under further pressure. Will the CBI survey continue to tell a more positive story?
Further announcements include:
•Monthly Industrial Trends – Confederation of British Industry
•Public sector finances, July – Office for National Statistics
•UK Index of services, June – Office for National Statistics
•Monthly economic commentary – Office for National Statistics