Tuesday preview: Mammoth Brexit debate begins, UK CPI, Vodafone and ITV results

Tuesday's financial diary is jam-packed with consumer price inflation data, a key debate on Theresa May's Brexit legislation and a deluge of company results from the likes of DCC, ITV, Land Securities and Vodafone.

Alongside those FTSE 100 giants, mid cap names including Aveva, BTG, Electrocomponents, FirstGroup, Intermediate Capital Group and McCathy & Stone are also due to report results or trying statements.

Further afield Bank of England Governor Mark Carney will speak alongside counterparts Mario Draghi, Janet Yellen, and Haruhiko Kuroda on a policy panel hosted by the ECB, while there is also data on China’s industrial production, fixed asset investment and retail sales that is likely to be widely read, also German consumer prices, a second reading of eurozone GDP, US producer prices PPI for October and speeches throughout the day from the three US rate setters and two from the ECB, plus the BoE's Ben Broadbent speaks at the LSE on Brexit and interest rates.

As well as speaking in Frankfurt, Governor Carney will have another task on Tuesday: writing a letter to the Chancellor.

October's consumer prices index will be published by the Office for National Statistics at 0930 GMT and the increase on last year is expected to have widened to 3.1% from 3.0% a month earlier, with a 0.2% rise on the preceding month.

When inflation moves away from their target, currently 2%, by more than one percentage point in either direction, BoE Governors must write an open letter to the Chancellor explaining why and what action is being taking to bring inflation back to target.

In its November Inflation Report, the Bank even revealed its revised staff forecast was for CPI to hit 3.2%.

But Carney's letter won't be published until after the next MPC meeting in mid-December.

"There is a good chance this is a one-off, as our profile for CPI inflation further out continues to show a dip back to 3.0% y/y next month and below that threshold thereafter," said economists at RBC Capital Markets.

For retail price inflation, the consensus is for a rise to 4.1% from 3.9%, although the producer price index is seen easing to 2.9% from 3.3%.

Inflation is a key national concern but it is still topped by Brexit when it comes to countrywide angst.

MPs will be beginning a marathon eight days of eight-hour parliamentary warfare over the subject when the House of Commons debates the European Union (Withdrawal) Bill, formerly known as the Great Repeal Bill or simply the Brexit bill.

The second reading of the bill, which aims to transfer EU law onto the domestic statute books after Britain formally leaves the bloc in March 2019, was voted through in September and now is the time for the legislation to enter the committee stage, where it will be debated line-by-line by MPs in the main chamber to pinpoint any potential problems, with some 400 amendments having been tabled.

COMPANY RESULTS

Vodafone, fresh from agreeing to create a UK fibre partnership, unveiling a new brand strategy and from selling its Indian mobile masts, will share details on its second quarter trading on Tuesday, including the effects of the abolition of EU roaming rates in June.

For 2018, the company gave financial guidance at its results in May of organic adjusted EBITDA growth of 4%-8% (€14.0-€14.5 billion); FCF around €5 billion

Analysts at Barclays forecast service revenues growth of 1.3% in the quarter, down from 2.2% in the first as the lack of EU roaming impacts the group.

German momentum is expected to remain steady with a modest decline in service revenues, Italy growth is likely to ease and the market remains competitive, while UK growth will be impacted by the handset leasing change and enterprise is seen remaining a challenge also.

At the EBITDA level, organic EBITDA is seen growing 7.8% to €7.2bn for the first half of the year, with strength in Italy and UK recovery offset by tougher comparatives from last year in Germany/Spain.

"We look for an update on cost cutting (Digital Transformation) and ongoing capex requirements given the Germany announcement and potential UK cofinancing."

Third-quarter results from ITV are due, though it's not until January that we will hear from new chief executive Carolyn McCall.

In the first half of the year the broadcaster upped its interim dividend as a show of confidence in the underlying business as first-half profits fell 8%, with a decline in advertising sales joined by fall in production profits due to higher investment and timing of shows.

Total external revenue in the six months to 30 June shrank 3% year-on-year to £1.46bn, with net advertising revenues for the ITV 'family' of channels falling 8% partly offset by 6% growth in non-NAR, with 55% of total group revenues coming from sources other than traditional spot advertising.

UBS expects revenues of £655m, virtually flat on last year with broadcast & online revenue down 2.7% and ITV Studios external revenue up 7.5% benefitting from 'Hell's Kitchen' and non-scripted US drama.

The Swiss bank expects ITV net advertising revenue to fall 4% in line with guidance, meaning the full year will be down just 5%, having feared a 6% decline before. "Media buyers have recently noted better momentum in Q4 with comps easier," UBS said, with October and November in 2016 falling 11% and 6% but December only 1%.

Land Securities also gives a half-time update having recently carried out a £502m bond tender and with some suggesting a long-feared industry melt-down may be looming.

UBS forecast EPRA net asset value per share of 1,434p, up 1% from last year's 1,417p with a slightly positive revaluation and gain from the sales of the 'Walkie-Talkie' building in London and pre-letting offsetting fees from bond redemptions.

"We forecast revenue profit of £194m and EPS of 24.5p."

Broker Numis said the company remains between a rock and a hard place: "CEO Rob Noel has repeatedly talked down the market which has not responded as poorly as expected, with slight reductions in capital values nowhere near the doomsday scenarios which would justify a completely risk-off approach.

"The retail sector remains structurally challenged, and recent pricing data at Bluewater may well be the beginning of the transactional evidence required to justify the valuation writedowns which the market already believes exist; we await to see the level at which the 42.5% Lend Lease/GIC stake trades (if it trades at all) and the flow through impact this has on LAND’s stake."

DCC, the Irish sales, marketing and support services group is delivering interim results after a first quarter update in July that said trading was in line with expectations and it expected the full year to produce “profit and growth”.

UBS sees potential for organic upgrades to consensus, as well as "significant M&A potential" in the near-term.

H1 itself is a seasonally less-significant period for DCC, and analysts expect circa 30% of the full year EBITA to fall in H1 in-line with prior years, namely £112.6m and EPS of 87p for the half.

Potential for some upside to consensus expectations could come from: signs of payback on investments in natural gas in France, successful turnaround in technology and reduction in dual running costs, or continued margin expansion in Healthcare – "none of which we believe are reflected in consensus".

Also Aveva will be giving an update and, given the confirmed Schneider merger, the focus of the update likely around the outlook for the combined business.

Barclays modelled just 1% organic growth leading to revenue of £87.6, further helped by GBP weakness, look for an improved 11.0% margin and £9.7m of adjusted PBT.

Tuesday November 14

INTERNATIONAL ECONOMIC ANNOUNCEMENTS
Consumer Price Index (GER) (07:00)
Industrial Production (EU) (10:00)
Producer Price Index (US) (13:30)

UK ECONOMIC ANNOUNCEMENTS
Consumer Price Index (09:30)
Producer Price Index (09:30)
Retail Price Index (09:30)

FINALS
McCarthy & Stone

INTERIMS
Aveva Group, BTG, Carclo, Cropper (James), DCC, Electrocomponents, FirstGroup, Intermediate Capital Group, Land Securities Group, Oxford Instruments, Picton Property Income Ltd, Renold, Speedy Hire, SRT Marine Systems, Trifast, Vodafone Group

TRADING ANNOUNCEMENTS
BBA Aviation, Bovis Homes Group, Irish Continental Group Units, ITV, Jackpotjoy, Meggitt, Polypipe Group, Telecom Egypt SAE GDS (Regs), UBM, Wentworth Resources Ltd (DI)

GMS
Nanoco Group

ANNUAL REPORT
McCarthy & Stone

AGMS
A&J Mucklow Group, Abcam, Rainbow Rare Earths Limited NPV, Smiths Group

FINAL DIVIDEND PAYMENT DATE
Redrow

INTERIM DIVIDEND PAYMENT DATE
Inspired Energy, Staffline Group