The coming week is due to see another round of updates and results from several blue-chips and well-known brands as June enters its second week.
Firms in the diary include cigarette maker BAT as well as catering group SSP and clothing retailer Ted Baker, as well as second-hand car seller Auto Trader and banking group Paragon.
There will also be interest in the macro calendar with US inflation and UK GDP data due towards the end of the week.
BAT hopes for some heat in new categories
A first-half trading update on Tuesday from British American Tobacco PLC (LON:BATS) is no expected to produce too many surprises, however, the blue-chip firm may provide some more guidance on how it expects its new categories division to perform.
Also in focus will be the company’s core US market, where the prospect of additional regulation and bans on menthol cigarettes may be causing concern among shareholders.
Meanwhile, BAT may be able to shore up its earnings with price increases and shifts in its product mix, while any updates on its dividend also likely to be eyed closely.
Paragon checks its accounts
Analysts at UBS are forecasting a pre-tax profit for the six months to March 31 of £70.7mln with a revenue increase of around 5%.
The bank is also expecting a loan loss charge for the period of £14.7mln, as well as a net interest margin of 2.28%, flat year-on-year.
SSP Group ploughs on with expansion plans as international travel slowly reopens
SSP Group plc’s (LON:SSP) interims on Wednesday may make a slightly less painful read than usual as the world is slowly opening up to travel (except the UK).
The company operates catering outlets, under its brands like Ritazza and Upper Crust, and runs concessions for Burger King and Starbucks at 180 airports and 300 railway stations around the world, so it has been hammered by travel restrictions imposed during the pandemic.
SSP has battened down the hatches by radically cutting costs, furloughing 22 thousand staff and raising £475mln through a rights issue to shore up its finances.
The share price recovering a little during the start of vaccine rollouts but the continued lockdowns across its markets have been a big source of pressure.
“Although much uncertainty still hangs over the sector, it hasn’t stopped management making expansion plans for the future, indicating they were ready to cherry-pick sites abandoned by smaller rivals,” analysts at Hargreaves Lansdown said.
“Choosing the right locations will be key given the working from home trend shows no sign of fully reversing and footfall across rail and air networks is likely to stay subdued.”
Ted Baker to look at post-lockdown opportunity
The fashion designer has struggled more than other peers during the pandemic due to existing issues as a bricks-and-mortar retailer and of its reliance on occasionwear.
Now that lockdowns are supposed to be a memory of the past, investors should be reassured by updates on how the strategy shift is working.
“Top of mind will be how online sales are doing. The pandemic only accelerated a seismic shift toward online shopping, one that Ted was fairly unprepared for. But the level of success of the newly launched digital platform will offer an insight into how turnaround efforts are doing. We’d like to see online sales making up a reasonable chunk of sales, even as lockdowns unwind,” analysts at Hargreaves Lansdown said.
“Another key measure of Ted’s turnaround efforts will be inventory management. The group has been bogged down by piles of unsold inventory, which had to be discounted, and in turn, weighed on margins. At the year-end, the group expects to have fully transitioned to a leaner model with product lifecycles slashed by a third.”
Auto Trader parks up with results
Admittedly, Auto Trader is one step removed from the used car sales business in that it merely matches up the buyer and seller but it must be galling for the company’s shareholders to see the share price gently decline this year while highly inflated valuations are put on Cazoo and Cinch, one of which has not even floated yet.
Auto Trader has the chance to put that right on Thursday with its full-year results statement, which is likely to feature a lot of detail about how the online marketplace has supported its customers – the car selling companies – during the prolonged lockdown by waiving listing fees.
The company said in January that it was expecting to swallow an operating loss of £5-7mln every month that its service was free to listers.
As such, the lifting of restrictions on car dealers on April 12 could not have come soon enough for Auto Trader. Focus in Thursday’s statement will naturally be on how much pent-up demand has enabled the company to claw back some of those losses.
US inflation data on Thursday is sure to get the talking heads wittering on about how soon the US central bank will take away the proverbial punch bowl.
In April, the annual US inflation rate rose to 4.2%, which was its highest in more than a decade, while producer prices were up 6.2%.
“This could just be the result of the low base caused by the pandemic in 2020 and early pent-up demand post lockdowns but sustained inflation could force central banks to tighten monetary policy and such concerns may explain why headline equity indices the world over are finding it a bit harder to make progress, so economists, central bankers and investors alike will be poring over this dataset,” AJ Bell said.
Friday’s UK gross domestic product (GDP) data for April will show whether March’s impressive rebound has continued.
GDP was estimated to have grown by 2.1% in March 2021, the fastest monthly growth since August 2020, as schools in some parts of the UK reopened throughout the month.
The service sector grew by 1.9% in March 2021, with schools re-opening across England and Wales and retail trade sales continuing to show strength, the Office for National Statistics reported.
Significant announcements expected for week ending 11 June:
Monday June 7:
Interims: Redx Pharma PLC (LON:REDX)
Tuesday June 8:
Finals: Card Factory PLC (LON:CARD), OnTheMarket PLC (LON:OTMP), B.P. Marsh & Partners PLC (LON:BPM), Intermediate Capital Group PLC (LON:ICP), TinyBuild Inc (LON:TBLD), VP PLC (LON:VP.), Oxford Instruments PLC (LON:OXIG)
Economic data: US trade balance
Wednesday June 9:
Interims: SSP Group PLC (LON:SSP)
Thursday June 10:
Finals: Ted Baker PLC (LON:TED), Auto Trader Group PLC (LON:AUTO), CMC Markets PLC (LON:CMCX), Halma PLC (LON:HLMA), JLEN Environmental Assets Group Ltd (LON:JLEN), Norcros PLC (LON:NXR), Mitie Group PLC (LON:MTO)
Economic data: US inflation, US jobless claims
Friday June 11:
Economic data: UK trade balance, UK GDP