Companies Reporting: ASOS, Unilever, WPP

Our regular look at the FTSE 350 and a selection of other companies reporting from 23 – 27 October.

• ASOS will be hoping to finish the year in style
• Heineken’s stalling volumes are continuing to flatten the profit outlook
• Expectations are muted for Unilever
• WPP could be in for a turbulent few months ahead
• Will Chevron’s challenges abroad overshadow expanding US shale footprint?

ASOS, Full Year Results, Wednesday 25 October

Aarin Chiekrie, equity analyst, Hargreaves Lansdown: “ASOS has had a tough time lately. Fourth-quarter sales were down 15% in last month’s trading update as a wet July and August drove a slowdown in the UK clothing market. Active customer numbers also slipped 9% lower across the full year, to 23.3m. That’s given investors plenty to be concerned about. If sentiment is to improve, ASOS’ full-year results next week are going to have to show some early signs that the ongoing transformation is bearing fruit.

The drive to trim inventory levels has made good progress so far, down around 30% year-on-year. But the discounts used to help clear this excess stock have hurt profits, and that action looks set to continue into the new financial year with more deadwood left to clear. That’s driving expectations that operating profit will land towards the lower end of the group’s £40-60m target range. How much longer until discounting the excess inventory ceases to be a drag on profit margins is a key question investors are hoping to see answered next week.”

Heineken, Q3 Results, Wednesday 25 October

Aarin Chiekrie, equity analyst, Hargreaves Lansdown: “Back at the half-year mark, revenue grew 6.6% on an organic basis, as double-digit price hikes helped to offset a 5.4% drop in volumes. But the higher revenue didn’t make its way down to the bottom line, as operating profit fell year-on-year due to high input cost growth and marketing spend.

In next week’s third-quarter results, analysts expect to see volumes continue to struggle. European weather has been unfavourable for beer drinkers – uncharacteristically too hot or too cold, leading markets to expect a decline in quarter-on-quarter beer volumes. The Asia Pacific region, Heineken’s most profitable area, is still feeling the effects of an economic slowdown which is putting pressure on growth.

Double-digit price hikes remain the order of the day and are expected to help push third-quarter revenue up 6.1%. Whether this is enough to keep recently downgraded profit guidance on track will be watched closely.”

Unilever, Q3 Trading Statement, Thursday 26 October

Steve Clayton, head of equity funds, Hargreaves Lansdown: “Recent quarters have shown a trend of strong revenue growth, much of it coming from pricing increases, often at the expense of volumes. This quarter, the market will be looking at the volume and value numbers as usual, and expectations look to be relatively muted. But crucially, these are the first numbers to be reported by newly arrived Chief Executive, Hein Schumacher. He is an outsider, having previously held the reins at Dutch dairy business, Koninklijke FrieslandCampina NV. Investors will be keen to see if he has any comments about his strategic plans for Unilever. In practice, it’s probably too soon to expect any significant changes in direction.”

WPP, Q3 Trading Statement, Thursday 26 October

Susannah Streeter, lead equity analyst, Hargreaves Lansdown: “It’s been tougher going for WPP as winds of uncertainty blow about how long interest rates will stay high for, and companies are being more cautious with their marketing budgets as a result. Lower spending by tech clients in particular, in North America, has weighed down on revenues, as firms increasingly adopt a wait-and-see stance.

But it’s been slower going in other sectors too, ranging from automotive to telecoms and media. The company has already downgraded its growth targets for the full year and net revenue is already forecast to come in as low as 1.5%, so investors will be anxious to see if those forecasts still hold or if another downward revision could be on the cards. Longer-term, its razor-sharp digital focus should hold it in good stead, but shareholders may have to brace for a bit more turbulence in the months to come.”

Chevron, Q3 Results, Friday 27 October

Derren Nathan, head of equity analysis, Hargreaves Lansdown: “Chevron’s third-quarter results should feel the benefit of the rise in oil prices seen during the period. Production in the key shale properties in the Permian basin is also expected to have edged up from the previous quarter. But recent months have not been without issues. Chevron’s gas fields and pipelines in the middle east have been directly impacted by the unfolding events in Israel. Investors will also be looking for more colour on the impact of industrial action in its Australian liquid natural gas operations.

The quarter should see the first contribution from the acquisition of shale producer, PDC Energy. Other recent investment areas include energy storage, hydrogen infrastructure, and carbon capture. Analysts would like to hear how these fit with the wider strategy, as well as whether shareholder distributions will continue to take a front seat following the record level of dividends and buybacks seen in the second quarter.”

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