Dear readers,
We are glad to announce of our new website, https://uk.webfg.com. There you will continue to have access to the full content of the Sharecast newswire, alongside an improved and expanded suite of market data and research tools for both the UK and the main international markets. As a first step in the transition to the new site, over coming days and weeks the news and data pages on Sharecast.com will redirect you towards the new website which we earnestly hope you will find even more useful than the current service. Should anyone like to comment or provide constructive criticism on the new layout or what features they would like to see added or deleted, do please send us an e-mail to info@digitallook.com. Lastly, of course, we wish to express our heartfelt gratitude for your support and encouragement over the years as we continued to grow and expand the service.
Very best,
Sharecast

Login/Register

Thursday preview: Lloyds, Shell, BATS, Diageo lead results deluge

Market Buzz

Thursday preview: Lloyds, Shell, BATS, Diageo lead results deluge

Wed, 26 July 2017
Article viewed 1698 times
http://stmedia.digitallook.com/web/img/dl/cmc_markets_hewson.png
bool(true)
Thursday preview: Lloyds, Shell, BATS, Diageo lead results deluge

(ShareCast News) - Thursday's tsunami of numbers sees a stupidly large number of large companies all reporting on the same day, including at least a dozen FTSE 100 companies and at least as many from the FTSE 250.


Lloyds Banking, one of if not the most widely held share in the UK, will report half-year results having raised full year guidance after the first quarter. The analyst consensus is for revenues of £4.4bn and underlying profits just shy of £2bn.

Investors will be looking for continued progress on return on capital and profits, particularly with improvements in net interest income and a reduction in impairment charges year-over-year, reckoned analyst Neil Wilson at ETX Capital.

Analysts at Barclays were expecting another operationally strong quarter, with the net interest margin sustained at a higher level and the cost of risk close to historical lows with the potential for provisions to drive further upgrades. "We expect mortgage pricing, lending volumes, consumer credit and the credit quality outlook to be other areas of focus," they said.

It will also be Lloyds' first set of results since the government sold the last of its shares in the bank in May, noted Laith Khalaf at Hargreaves Lansdown. "That won't have any immediate effect on tomorrow's results, though it does remove a major downward pressure on the share price.

"Lloyds is of course a bellwether for the UK economy, seeing as it is so plugged into loans to UK consumers and businesses. This is particularly relevant at the moment given the Bank of England's concern over the consumer credit bubble, and any sign of rising loan impairments could hint at problems brewing in the UK economy at large," Khalaf said, crossing his fingers for a rise in the interim dividend.

He noted that the comparable period for the first half of 2016 included a £790m provision, so investors interested in the performance as Lloyds as a business, rather than as an accounting construct, "best to keep an eye on the year on year growth in underlying profit, rather than the movement in statutory profit, which will be flattered by such a big accounting cost in last year's numbers".

SHELL, BATS, ASTRA

Four larger companies than Lloyds are also due to report on Thursday, led by Royal Dutch Shell, which reports second quarter earnings/interims.

This quarter is the fourth since Q2 2016 which was the first full consolidated quarter of the combined group after the acquisition of BG, which were "literally inexplicable", said UBS, but kicked off three quarters that have built impressively, with Q1 2017 especially impressive. "Q2 production is forecast to be approximately flat with underlying growth offset by disposals and the effects of the Pearl GTL plant shut-down which was ramping back up in the quarter."

Barclays expects second quarter earnings will be up more than three times the level of last year, with improvement coming in part from higher prices but also lower maintenance and lower costs. Analysts noted the company will be taking roughly $1.2bn of restructuring charges as a special item but they still expect net debt to fall, helped especially by the completion of more than $5bn of disposals.

A slower first-half for British American Tobacco has been well flagged by management, with the second half top and bottom-line expected to improve. Consensus analyst estimates put EPS at 132p.

UBS forecast BATS will report volumes down 6.2%, constrained by tough comparatives in some areas and challenging trading conditions in certain markets, such as Brazil and South Africa, but expected to be offset by strong price/mix up 6.4%, for clean EPS of 132.4p. "We expect a sequentially stronger H2 volume performance leaving FY17 volumes down 3.3% an industry down ~4% and price/mix of +6.5%."

"The writing is on the wall for tobacco groups and falling cigarette sales is making British American Tobacco, the third largest stock listed on the FTSE, pivot towards vaping [and] heat-not-burn products," said ETX's Wilson, noting that BATS is up more than 30% since just prior to the Brexit referendum thanks in part to the benefit from the weak pound. "But the vast bulk of earnings still come courtesy of tobacco products, sales of which are expected to continue to slow. The key for BAT is whether it's beating the market decline of around 4%. A ban on cigarette packs of fewer than 20 and plain packaging is hitting sales but prices are rising."

AstraZeneca will update on its second quarter/half year numbers, a day after drugmaking rival GSK. After the first quarter, management gave guidance of total revenue to decline by "a low to mid single-digit percentage" and core EPS down "a low to mid teens percentage".

Deutsche Bank expects management to reiterate this guidance as the group reaches its sales nadir in the second quarter, with a 12% year-on-year product sales decline, with an increase in other operating income and cost savings to mitigate this at the core EPS level. Analysts believe product sales will return to growth by Q4 as pressures annualise out and are offset by new products and the growth franchises. "Focus will remain on pricing and competitive pressure on diabetes and respiratory."

DIAGEO, SKY, SCHRODERS, JUST EAT

Diageo, fresh from paying $1bn for George Clooney's tequila brand, will be announcing its final results where it will be looking to build on first-half organic sales growth of 4.4%, its best since 2013. Analyst consensus is for 4.2% organic sales growth and for organic operating profit to climb by more than 5% with adjusted earnings per share of 105p. Diageo said in January it expected foreign exchange effects to lift operating profit by £460m and set mid-term guidance of "mid-single-digit OSG and 100bps of organic EBIT margin expansion".

Barclays thinks numbers will be "fine", forecasting group organic sales growth up 4.2% with organic margins up 25 basis points despite a step-up in A&P investment in H2 for clean EPS of 105.1p.

Sky will publish prelims, following its most recent update from the media group that suggested a robust performance with revenue growth of 11%, solid profit performance, and 769,000 new customers added over 12 months, indicating the group remained "on track for the full year". Broker Shore Capital did not expect any significant surprises but "will look for evidence of pricing pressure, increased churn (11.6% in the UK & Ireland during H1), and for signs that adding new customers is becoming more difficult amidst growing competition from other platform such as Netflix and Amazon."

Asset manager Schroders reports interim results with UBS looking for net revenues to be up 19.5% to £949.9m, up 3.5% from H2 2016 and pre-tax profit before exceptional items of £344.8m, up 22.1% but 1.7% below consensus expectations. "Bottom-line, we forecast adjusted diluted EPS of 101.0p, 21.8% higher than H1 2016 and 3.0% above consensus expectations."

Just Eat also is booked in to deliver interims. Barclays estimates organic revenue from the food delivery website will grow 25% and revenues come in at £230m for the half, driven by expectations of 24% order growth. "Key at the results will be UK orders, where we expect the implied Q2 growth to pick up to 21% from 17% in Q1."

AND SOME SMALLCAPS

Looking at some of the small cap names, CMC Markets is expected to see relatively muted trading during its first quarter, reflecting the ongoing benign levels of volatility. Broker Numis estimates assume first-half revenues will be largely unchanged year on year basis as modest growth in active client numbers is offset by lower revenue per client; "but this is obviously dependent on how much market exposure the group assumed during the period and whether it made any money from these active positions."

Numis client Burford Capital, a litigation and arbitration funding specialist, is expected to report total income up 42% to $108m and adjusted PBT increased 33% to $74m. "However, the confidential, potentially privileged, long-term and uncertain nature of each investment makes forecasting such near-term returns incredibly difficult."

Foxtons is another client of Numis. The London estate agent is forecast to endure a reduction in first half profits given the challenging market backdrop in London and strong comparative from 2016's rush for second homes, which was confirmed in 25% reduction in group revenue in Q1, driven by a 45% fall in sales commissions.

"Whilst there is little sign of the London housing market improving from its current low level of transaction volumes," which Numis estimates will be below 2008 levels in 2017, "volumes do not seem to be getting commensurately worse and when volumes do improve we think that Foxtons will be a big beneficiary given its robust stock levels and the high drop through margins (given spare capacity and higher fixed cost base)."



Thursday July 27

INTERNATIONAL ECONOMIC ANNOUNCEMENTS
Continuing Claims (US) (13:30)
GFK Consumer Confidence (GER) (07:00)
Initial Jobless Claims (US) (13:30)
M3 Money Supply (EU) (08:00)

UK ECONOMIC ANNOUNCEMENTS
CBI Distributive Trades Surveys (11:00)

FINALS
Angle, Diageo, Renishaw, Sky, Torotrak

INTERIMS
Anglo American, AstraZeneca, British American Tobacco, Burford Capital , Countrywide, Foxtons Group , Greencoat UK Wind, Impellam Group, Inchcape, Indivior, Intu Properties, Just Eat, Lancashire Holdings Limited, Lloyds Banking Group, National Express Group, Novolipetsk Steel GDS (Reg S), Primary Health Properties, Relx plc, Rentokil Initial, Royal Dutch Shell 'A', Royal Dutch Shell 'B', Schroders, Schroders (Non-Voting), Smith & Nephew, St James's Place, Vesuvius, Weir Group

TRADING ANNOUNCEMENTS
Britvic, Countryside Properties, CYBG , Daily Mail and General Trust A (Non.V), Glencore, Kaz Minerals, Ladbrokes Coral Group, Sophos Group, Tate & Lyle

Q2
AstraZeneca, Indivior, Novolipetsk Steel GDS, Royal Dutch Shell 'A', Royal Dutch Shell 'B', Smith & Nephew, Smith & Nephew

Q3
Thomas Cook Group

IMSS
CMC Markets, Hogg Robinson Group

SPECIAL EX-DIVIDEND DATE
Artemis Alpha Trust, Somero Enterprises Inc. (DI), System1 Group

EGMS
MHP SA GDR (Reg S)

AGMS
1Spatial, Aquila Services Group, Bonmarche Holdings, Caffyns, Charles Stanley Group, CMC Markets, D4T4 Solutions, Escape Hunt , Etalon Group Public Company Limited GDR (Reg S), F&C Global Smaller Companies, Hogg Robinson Group, Immunodiagnostic Systems Holdings, Montanaro European Smaller Companies Trust, Norcros, Orogen , Record, Tate & Lyle, Trifast



FINAL DIVIDEND PAYMENT DATE
Big Yellow Group, Fuller Smith & Turner, Mckay Securities

FINAL EX-DIVIDEND DATE
Investec, SSE, System1 Group

INTERIM DIVIDEND PAYMENT DATE
Mobeus Income & Growth 2 Vct, Netcall

INTERIM EX-DIVIDEND DATE
Aberdeen Frontier Markets Investment Company, Fenner, Nichols, Porvair

QUARTERLY PAYMENT DATE
Land Securities Group

QUARTERLY EX-DIVIDEND DATE
APQ Global Limited, Blue Capital Alternative Income Fund Ltd (DI), Custodian Reit