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William Hill (Q3 trading update) Shares in the betting group have recovered modestly in recent weeks, mainly due to hopes that the government’s review of fixed odds betting terminals may not be quite as punishing as previously feared. The last trading update in August beat market expectations with an especially strong online performance, although first half profits fell 7%. Progress in the Australian and US operations will also be a focus for investors in this update. |
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Tuesday Babcock International (Q2 results) Investors will be hoping that management can restore some confidence in the company after recent concerns over potential delays to defence contracts. The shares have underperformed and were not helped by problems at other companies in the support service sector. Investors will be concentrating on the outlook for 2018, its order book and bid pipeline. easyJet (Final results) These are interesting times for the airline sector and especially easyJet. The recent appointment of a new chief executive, a former deputy CEO of TUI, did not set the market alight but at least removes the uncertainty about who is going to replace Dame Carolyn McCall in the captain’s seat after she leaves in January. The purchase of assets from the failing Air Berlin airline was seen as a positive move, and the failure of Monarch may also create opportunities for the company. In October the company said the fourth quarter had seen record passenger numbers, although revenue per seat fell back 3.7%. Intertek (Q3 trading update) Shares in this quality assurance, safety testing and inspection company have performed exceptionally well over the years. It is still quite exposed to trading volumes and capital expenditure in the commodities and oil market, but the pickup in activity in these sectors should help the company see further improvements. The group at the half year stage saw revenues rise by 14%, but the FX boost experienced by sterling’s fall after Brexit may begin to fade. However, we would expect cost savings and integration of small acquisitions to further improve the margins. Kingfisher (Q3 trading update) The company has been forced to make structural changes to cut costs as difficult conditions remain in certain parts of its business, especially in France. These structural changes and the unification programme of bringing different operations together have had its difficulties. However, it’s hoped we will begin to see the benefits come through shortly. While there is some expectation that the hard pressed consumer in the UK is feeling the pinch and making fewer visits to B&Q stores in the UK, we should still expect to see good growth in their Screwfix division which targets the professional market. Investors will expect to hear the progress of their plan to expand the product ranges and how expansion in Germany is going. Other companies reporting today include: CRH (Q3 trading update), Compass (Q4 results), Telecom Plus (Q2 results), Johnson Matthey (Q2 results) |
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Wednesday United Utilities (Q2 results) The sector has been under pressure recently on the back of politicians keen to push for price caps and ahead of the regulators first draft for the next regulatory period which is due in December. Investors will not be expecting much in the way of excitement, but there could certainly be more interest regarding any comments from management on their outlook in light of the growing threats. Other companies reporting today include: NewRiver Retail (interim results), Breedon (Q3 trading update) |
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Thursday Centrica (Q3 trading update) This is another utility group whose shares have had a torrid 2017. The share price has been struggling to make any headway, on the back of comments from politicians on both sides of the house, along with mild weather hitting demand, falling oil and gas prices and analyst earnings concerns. Investors will be hoping for a cold winter in order to boost demand and for further updates relating to the groups future strategy. Other companies reporting today: Severn Trent (Q2 results) |
Economic Diary
21 November, Public Finances, October – Office for National Statistics
Once a year, the press and analysts focus on the public finances with forensic detail, and that is at the time of the budget. In the financial year to September, public sector net borrowing, excluding public sector (PSNB ex) was 7.2% less than in the same period last year. The Office of Budget Responsibility (OBR) had forecast a 13% rise in PSNB ex for the year as a whole. Borrowing seems to be on course for around £42.3 billion in this financial year, £16 billion less than the OBR predicted. There is one concern, public finances in the first half of the year were boosted by one-offs, such as a boost to self-assessment receipts linked to a change in the dividend tax rate. The second half may see much larger borrowing.
22 November, UK budget – Chancellor of the Exchequer
The UK’s economic performance so far this calendar year has been much weaker than the Office of Budget Responsibility, or indeed the IMF, predicted, and as result the chancellor has less leeway than he may well have been expecting a few months ago. Furthermore, the OBR is expected to revise down its forecasts for UK productivity, and thus potential growth. This means that the chancellor may well conclude that he has less scope for stimulus than he would like.
Further announcements:
21 November
Industrial Trends Survey – Confederation of British Industry
22 November
Profitability of UK companies
FOMC Minutes Meeting of October 31- November 1, 2017 – FED
23 November
Distributive Trades Survey – Confederation of British Industry
Index of Services, September – Office for National Statistics
UK GDP Q3 2017, 2nd estimate – Office for National Statistics
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