Companies Reporting: AG Barr, United Utilities, boohoo

Our regular look at the FTSE 350 and a selection of other companies reporting from 26 – 30 September 2022.

• Half year results look promising for AG Barr as the UK economy reopens
• United Utilities will show whether it has been able to fend off inflationary pressures
• boohoo will reveal whether it’s managed to eek out revenue growth after a murky first quarter

AG Barr, Half Year Results, Tuesday 27 September

Derren Nathan, Equity Analyst, Hargreaves Lansdown, “UK drinks group AG Barr has welcomed the reopening of hospitality and “exceptional” British summer weather as performance on their catalogue of drinks showed positive momentum. Coupled with successful pricing and marketing, the group expects revenue to rise 16% from a year earlier to £157m.

Margins have also looked strong, and last year’s growth was no mean feat in the current environment. These higher margins will allow some headroom from rising costs, but management acknowledge they aren’t immune, so further confirmation that full year profit is expected to grow would provide some comfort to investors.

Last year’s strong performance allowed the group to reinstate the dividend after a suspension in 2020. A healthy cash position means investors will be watching on for any further dividend progression next week.”

United Utilities, Trading Statement, Tuesday 27 September

Laura Hoy, Equity Analyst, “United Utilities has seen revenue climb beyond pre-pandemic levels as non-household demand returned, but unfortunately operating profits haven’t come along for the ride. We’re expecting United Utilities to warn for more of the same when it reports. Higher materials and labour costs should wipe out any revenue gains this year, and the next price review isn’t set to kick in until 2025. Between the growing need to shore up leaky pipes and calls to keep customer bills down amid the cost-of-living crisis, the next regulatory cycle may not offer much relief anyway.

Dividends will be on investors’ minds—with a prospective yield of over 4%. United Utilities is somewhat of an income play. The group has said it will raise its dividend in line with inflation. But given this environment, UU could find itself having to dip further into debt to keep on top of its dividend payments but remember yields are variable and not a reliable indicator of future income.”

boohoo, Half Year Results, Wednesday 28 September

Laura Hoy, Equity Analyst, “The big question when boohoo reports is whether or not demand is holding up in the current environment. Supply chain bottlenecks are an industry-wide issue, but they could put a serious damper on boohoo’s growth plans. First quarter results were lacklustre at best and given the group’s investing heavily in expanding capacity, demand is essential if it’s to pull off an expansion in the US.

After a revenue decline in the first quarter, investors will be looking for improved trading at the half in order for the group to make good on its forecast for single-digit full year growth. That’s a tall order considering consumers are more cash-strapped than ever.

While the group’s appeal to the younger generation remains in question as budgets are stretched, the addition of new brands that cater to different demographics have the potential to bring fresh growth through the door. It would be good to see an update on how acquisitions like Debenhams and Dorothy Perkins are faring under the boohoo umbrella.”

This article has been brought to you in association with Hargreaves Lansdown. All opinions expressed in this article are from the analysts and do not necessarily represent the opinions of The Armchair Trader.

FTSE 100, FTSE 250 and selected other companies scheduled to report

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