The coming week will see some big news in both the company news diary and the macroeconomic calendar, with blue-chips including grocery delivery group Ocado and engine maker Rolls-Royce among the famous names.
Meanwhile, while there is little in terms of data, the macro arena is likely to draw focus as investors await news of both a last-minute Brexit deal between the UK and the EU as well as any results of negotiations over new US stimulus measures.
Ted Baker to open the dances
Like for most fashion retailers, this year has been a tough one on trading amid forced closures, lower footfall and a drop in consumer confidence.
Investors will want to finally see some numbers on trading from the summer through to the latest lockdown, with some projections on how the important Christmas season may pan out.
All eyes will be on the growth of the e-commerce platform, which has been key to salvage trading for the retail sector in general.
The market will want to hear updates on the restructuring plan, which involved around 500 job cuts, or 25% of the workforce.
Ashtead – cash-tead more like!
Construction equipment hire group Ashtead Group PLC (LON:AHT) is due to post a trading update and half-year results on Tuesday, having said revenue and profits in the first quarter fell 6% and 38% respectively.
While the FTSE 100 group reported lower profits because of the effects of the coronavirus pandemic, it still managed to generate a record £447mln of free cash flow.
Management said in September’s update that as long as there are no widespread shutdowns in the US from a significant second wave of COVID-19, they were expecting full-year rental revenue to fall by “mid to high single digits”, excluding currency swings, with annual free cash flow seen topping £1bn.
The board is also mulling the “appropriate time” to resume its share buyback programme alongside its dividend, which was maintained back at the full year results in June.
Analysts expect second quarter pre-tax profit to fall 19.9% to £297mln.
Those at UBS expect some comments from management about early capex plans for the following year as Ashtead has paused nearly all capex, with current guidance for around £0.5bn of investment this year compared to pre-pandemic plans for £1.1-1.3bn and depreciation of circa £1.2bn.
Is Ocado delivering a third earnings upgrade?
In September, the delivery giant said group underlying earnings (EBITDA) would be over £40mln and it raised it again to £60mln last month thanks to strong sales and operational gearing.
At this stage, the market may wonder if the firm is in for a third upgrade.
“As a reminder, before Covid-19, online penetration of grocery was 7% in the UK; during this unprecedented time it hit 13%,” analysts at Peel Hunt noted.
DS Smith unpacks results
Thursday’s interim results from packaging giant DS Smith PLC (LON:SMDS) are likely to be eyed for some more positive news after upbeat trading updates in September and November have somewhat alleviated the gloom from the company’s full-year results in July, when it cancelled its dividend and noted a £15mln hit to its bottom line from the coronavirus pandemic in the final two months of last financial year.
With the firm having previously voiced its intention to return to the dividend list, investors will be looking for any more details on when payments could restart. Shareholders will also be looking for any changes to the company’s previous expectations of lower volumes and higher costs for the year to April 2021.
Analysts will also be watching for any changes in the company’s forecasts, with full-year adjusted pre-tax profits expected to fall 20%., as well as whether DS Smith will retain its long-term financial goals which include an adjusted operating margin of between 10-12%.
Marston’s set to suffer hangover from lockdown
Final results from publican Marston’s PLC (LON:MARS) are likely to count the cost of a difficult year for the firm and indeed the entire sector, with the company having already announced plans to cut 2,150 jobs as a result of the pandemic on its business.
The effects were also confirmed by a year-end update in October, in which the company reported that sales in the year were £821mln, 30% below last year, as the UK’s lockdown forced it to close its pubs.
As its last year ended on October 3, investors will also be eyeing any details on how Marston’s has coped with the second lockdown over November, as well as its outlook as the new regime of restrictions tiers comes into effect.
On The Beach to remain unpacked until the spring
Also on Thursday, On The Beach Group PLC (LON:OTB) is releasing its finals, which are not expected to add much to last month’s trading update.
Full-year profit before tax was forecast to break even, with an expected £45mln cost from the expectation that cancelled holidays will continue over the winter, with cancellation rates in excess of 90% across summer 2020.
According to house broker Peel Hunt, holidays taken last summer were less than 10% of normal, while analysts don’t expect greater clarity until the spring.
“With a ‘hibernation’ cash burn of £2mln per month the group is very well placed to wait out the winter and address the eventual surge in customer demand with marketing investment sufficient to make sure it takes market share,” the commented.
Rolls-Royce looks to restart the engines following refinancing
The end of the week will bring a trading update from aircraft engine maker Rolls-Royce Holdings PLC (LON:RR.), a few weeks after the company completed a mammoth £2bn rights issue to help its balance sheet cope with the effects of the coronavirus pandemic.
With the company’s bank balance now boosted, investors will likely be hoping for any details on how the company plans to use its new cash, as well as its outlook for the aviation markets following recent news of coronavirus vaccines, which could help pull the air travel sector and its engine customers out of their slump.
There may also be interest in whether the company could be in place to benefit from the recent multi-billion defence spending package unveiled by the UK government, as well as any updates on the company’s efforts to secure £217mln of government funding to build 16 mini nuclear power stations as part of a consortium of firms.
Bellway rings out the week
Finishing off the week, Bellway PLC (LON:BWY) will provide an update on the period since its July year-end, having said at its final results in October that the new financial year got off to an “exceptionally strong” start.
With house reservations up by 30.6% to 239 per week in the nine weeks since August 1, the FTSE 250-listed builder said sales completions should total around 9,000 in the full year.
With orders at a record £1.87bn, directors were buoyed enough to resume dividend payments after their coronavirus-inspired hiatus, with a final payment at 50p down 50% on the prior year but with a pledge to increase this further as earnings recover.
Bellway had earlier in the year pointed to “incremental costs” arising from Covid hitting productivity and increasing health and safety requirements.
The coming week’s main macroeconomic news is likely to be around Brexit and a US stimulus package.
With a European council meeting scheduled for Thursday and a Euro Summit to discuss the banking union and capital markets union on Friday and the year-end deadline looming horribly, Brexit talks are continuing over the weekend.
“No rest for the weary,” cries market analyst Marshall Gittler at BDSwiss. “I thought that after the US election was over, maybe I could relax a bit. Not yet! Next week we have a number of important events.”
He says Brexit will be the main focus.
“With the Brexit negotiations, I feel like I’m back in high school, trying to find out from my friends whether that cute girl in French class likes me or not. Some of her friends say she does. Others say she doesn’t. Some say she does, but the next day say she doesn’t. Sometimes I see her in the hall and smile at her and she smiles back. Sometimes she ignores me.
“But the prom is coming up next week, so we’ll finally find out for sure.”
In terms of macro data, for the UK there will be housing numbers from Halifax on Monday and from RICS on Thursday, retail sales numbers from the BRC on Monday night, with a GDP estimate for October from the ONS on Thursday, along with industrial production and trade figures.
The Bank of England’s twice-yearly Financial Stability Report will be published on Friday.
In the US, weekly jobless numbers are joined on Thursday by consumer confidence data, while on the same day there’s a European Central Bank monetary policy decision.
Significant announcements expected for week ending 11 December:
Monday December 7:
Tuesday December 8:
Interims: Begbies Traynor Group PLC (LON:BEG), GB Group PLC (LON:GBG), SDCL Energy Efficiency Income Trust (LON:SEIT), Solid State PLC (LON:SOLI), ULS Technology PLC (LON:ULS), Vianet Group PLC (LON:VNET)
Wednesday December 9:
Thursday December 10:
Trading updates: Ocado Group PLC (LON:OCDO)
Economic data: UK GDP, UK production, US inflation, US jobless claims, ECB rates decision
Friday December 11:
Finals: Nexus Infrastructure PLC (LON:NEXS)
Economic data: US PPI, US Michigan consumer sentiment