Ian Forrest, Investment Research Analyst at The Share Centre, gives his thoughts on what to expect from companies announcing results week commencing 24 July 2017.
Reckitt Benckiser (Q2 results)
It has been an eventful few months for Reckitt with the $17.9bn acquisition of US baby-food maker Mead Johnson, a cyber-attack which led the company to lower its full-year revenue guidance, followed by the sale of its food business to US ingredients giant McCormick for $4.2bn. Investors should note that the shares have responded well to all this, outperforming the market, although the market will be keen to hear an update on how the businesses affected by the cyber-attack are performing.
We currently list Reckitt Benckiser as a BUY
Rio Tinto (Q2 results)
Q2 production numbers were a little mixed as copper production was still in the process of overcoming industrial disputes, there were better production figures from its key commodity, iron ore, but shipment was held back due to rail maintenance works. While investors should be reasonably happy with production numbers, commodity prices have been a little volatile still, especially iron ore which will hurt overall revenue figures. Investors will still expect to see a focus by management on cost and capital efficiencies.
We currently list Rio Tinto as a BUY
Informa (Q2 results)
The group academic publishing division will probably not provide too much excitement and management are likely to suggest that business continues to be stable here which has helped the transition of going online. Furthermore, its Global Exhibitions division should continue to show strong growth rates. Investors should expect currency movements to be favourable for translated earnings and investors will expect an update on the group's recent acquisitions and the cost synergies generated. Its Knowledge & Networking division hasn't been doing as well lately and investors will hope for signs of a turnaround here.
We currently list Informa as a BUY
Companies also reporting today include: Croda International (Q2 results) – HOLD, Provident Financial (Q2 results) – HOLD, Segro (Q2 results) – HOLD
ITV (Q2 results)
These are interesting times for ITV with news of Dame Carolyn McCall's appointment as the new CEO to replace Adam Crozier. Recent results have shown that broadly the business continues to move in the right direction with an encouraging performance at the Studios business. Investors will be watching that as well as any news on advertising revenues which have been falling.
We currently list ITV as a BUY
Companies also reporting today include: GlaxoSmithKline (Q2 results) – BUY, Tullow Oil (Q2 results) – BUY, Sage (Q3 trading update) – HOLD, Marston's (Interim management statement) – BUY, Hammerson (Q2 results) – HOLD, GKN (Q2 results) – BUY, Compass (Q3 trading update) – BUY
AstraZeneca (Q2 results)
The shares have been a little volatile of late amid speculation that Pascal Soriot, its chief executive was about to leave for Teva Pharmaceuticals. However, investors were mildly relieved after the rumour was quashed. There will still be expectations that generic competition is hurting the business and will be reflected in its quarterly revenues, but management commentary will probably focus on the R&D pipeline and suggest that group sales from here on should begin to pickup.
We currently list AstraZeneca as a BUY
Lloyds Banking (Q2 results)
It has been a good start to the year for Lloyds with the acquisition of the MBNA credit card business, payment of another special dividend and news that the government has sold all of its remaining shares. The bulk of the restructuring is now behind the group and first quarter results in April beat market expectations. Profit guidance for the full year was also raised at that point so investors will be looking for any further comments on that. With growing hopes for increased returns to shareholders the market will be watching for news on dividends.
We currently list Lloyds Banking as a HOLD
Sky (Q4 results)
In the first nine months of the year Sky saw revenues rise 5% with 100,000 new customers joining the service. Sky continues to invest in its range of media products including SkyQ, a mobile phone launch, a partnership with HBO and Sky HD in Germany. With fears of a squeeze on disposable incomes investors will be watching subscriber growth and the take-up of the new services. All of this is rather overshadowed by the agreed offer from 21st Century Fox which is likely to be referred to the competition authorities.
We currently list Sky as a HOLD
Companies also reporting today include: Smith & Nephew (Q2 results) – BUY, British American Tobacco (Q2 results) – HOLD, Anglo American (Q2 results) – HOLD, Tate & Lyle (Q1 trading update) – BUY, St. James's Place (Q2 results) – BUY, Rentokil Initial (Q2 results) – HOLD, RELX (Q2 results) – HOLD, Diageo (Q4 results) – BUY.
BT (Q1 results)
These figures come shortly after regulator Ofcom said it would be closely monitoring the extent to which BT's internet infrastructure division, Openreach, adheres to the new rules it has laid down. In May the company reported a 19% drop in pre-tax profits and forecasted that earnings in the new financial year would be slightly down on last year. The group also said the dividend this year would be less than the 10% previously stated so any update on that will be of particular interest.
We currently list BT as a HOLD
Barclays (Q2 results)
Over the last few years Barclays has been in the news for the wrong reasons and we are unlikely to get too much comment from management on the recent charges relating to the Qatari fundraising going all the way back to the height of the financial crisis. Instead, focus will be on progress with asset disposals and the streamlining of the business. Investors will also lookout for any improvement in its net interest margin and capital ratios as a sign of progress.
We currently list Barclays as a HOLD
Companies also reporting today include: International Consolidated Airlines (Q2 results) – BUY
26 July: UK GDP, preliminary estimate: April to June 2017 – Office for National Statistics
The UK economy slowed to a crawl in the first quarter, growing at just 0.2%. Q2 probably saw a better performance, but how much better? This is the question that matters. Recent purchasing mangers' indexes were consistent with growth of around 0.5% in Q2, but they tend to paint a more positive picture than subsequent hard data. Furthermore they do not reflect retail sales which have been lacklustre for most of this year. The National Institute of Economics and Social Research recently forecast growth of 0.3%.
26 July: FOMC meeting Two-day meeting – Federal Reserve System
After rising sharply earlier in the year, US inflation has fallen back in recent months and, tellingly, core inflation is down too. The Federal Reserve System has suggested more rate hikes will follow, but with US inflation looking subdued, it may well back-track. It is not so likely to increase interest rates today.
Further announcements include:
- Quarterly Industrial Trends Survey – Confederation of British Industry
- US Consumer Confidence Index – Conference Board
- Index of services, May – Office for National Statistics
- Monthly Distributive Trades Survey – Confederation of British Industry