Skip to content

Companies Reporting: Barratt Developments, Currys, Berkeley

*

Our regular look at the FTSE 350 and a selection of other companies reporting from 04 – 08 September.

  • Volumes and prices in focus for DS Smith
  • Margins at Barratt Developments could be in for a squeeze
  • Cost inflation proves to be a spoke in Halfords’ wheel
  • Demand outlook will be crucial to a positive market reaction for Currys
  • Can Vistry keep guidance intact, despite a challenging backdrop?
  • Berkeley Group sees a lack of urgency among buyers

DS Smith, Q1 Trading Statement, Tuesday 5 September

Matt Britzman, equity analyst, Hargreaves Lansdown: “For cardboard box provider DS Smith LON:SMDS, it’s volumes and pricing updates that investors will be looking out for in next week’s trading statement. Volumes took a larger hit than expected last year as economic conditions were a challenge and end-consumer demand dropped. Word from management was that trends were improving – next week will shed light on whether that has continued over the quarter or not.

Valuations across the packaging sector have been under pressure recently, as markets weigh up the extent of the volume issues and the balancing act at play with prices. Hikes and cost-cutting are the main reason DS Smith was able to post strong profit growth last year. Since then, paper prices have come down and box pricing will likely follow suit. The scale of any declines will likely be key, as will any impact on the prices it’s able to charge customers.”

Barratt Developments, Trading Statement, Wednesday 6 September

Susannah Streeter, head of money and markets, Hargreaves Lansdown: “Housebuilders have proven to be super-sensitive to interest rate speculation given that high mortgage payments are having a significant dampening effect on the market. Barratt Developments LON:BDEV has been hit by the triple whammy of higher borrowing costs, the closure of Help to Buy scheme and a 49% drop in first-time buyer reservations.

Forward sales guidance will be watched closely given the tricky economic environment. Investors will also be keen to see what’s happening with average selling prices. They were being pushed higher by an increased proportion of London completions.

However, with the latest data from the Bank of England indicating that mortgage approvals have dropped month on month, there will be concern this will lead to fewer completions, particularly with higher interest rates adversely affecting affordability criteria. House prices are trending lower in and with potential buyers driving a harder bargain, margins could come under a greater squeeze.”

Halfords, Trading Statement, Wednesday 6 September

Susannah Streeter, head of money and markets, Hargreaves Lansdown: “The cost-of-living crisis has made it hard going for Halfords LON:HFD, with customers cautious about spending big on a new set of wheels when household budgets are facing such a squeeze. What’s been worrying is that it’s not just been an uphill struggle to sell big ticket items like bikes, but there has been caution too for essentials like new tyres, with people putting up with more wear and tear.

Cost inflation has also been a big spoke in the Halford’s wheel, partly accounting for the 37% fall in underlying operating profit, so signs these pressures are easing will be very welcome. Cash generation was expected to be weighted towards the second half of the year with a range of incentives aimed at keeping the tills ringing. The company has put extra resources into growing its loyalty club and offering interest-free financing to help spread costs of bigger ticket items and investors will be keen to see if these initiatives are paying off.”

Currys, Trading Statement, Thursday 7 September

Sophie Lund-Yates, lead equity analyst, Hargreaves Lansdown: “Currys has had a tough year so far, with the valuation shedding 13% since January. The group specialises in selling electrical and home goods, and times are tough. The cost-of-living crisis and slowdown, compared to the frenzied buying of chest freezers during the pandemic, have seen performance slow. But all eyes will be on its margins next week. Operating margins are languishing in the region of 2 %, which leaves very little room for error.

Because it’s a trading statement, rather than a full set of results, Currys LON:CURY might not release explicit margin information, but investors should get an idea of what the future holds.

Getting margins out the basement partly rests on the shoulders of prices. Online competition means Currys is often forced to “invest in pricing”, which is a fancy way of saying it gets the sale stickers out. Analysts would like to know more about the group’s demand expectations as we head into the winter quarter. It might not feel like it, but the all-important Christmas trading season is only around the corner and it’s about now that retailers will be trying to map exactly what the season will mean for revenue and profit.”

Vistry, Half Year Results, Thursday 7 September

Aarin Chiekrie, equity analyst, Hargreaves Lansdown: “Despite the challenging environment for UK housebuilders, Vistry’s LON:VTY average weekly sales rates held broadly flat in the first half. And the group’s Partnerships division, which includes a contribution from recently acquired Countryside for the first time, saw completions nearly treble to 3,203. That’s the driving force behind Vistry guiding for underlying revenue to jump from £426m to £930m in next week’s first-half results.

But, with recent increases in interest rates and mortgage costs, challenges look set to mount for buyers. Investors will be keeping an eye out for updates to the full-year outlook, which had been expecting underlying pre-tax profits to land in above £450m.

The balance sheet’s also a key area of interest. The last update showed Vistry had swung from a £115m net cash position to a £330m net debt position, as it looks to drive growth in its Partnerships business. But, as cash resources get stretched, the group’s 6.2% prospective dividend yield could get pulled back as spending priorities change.”

Berkeley Group, Trading Statement, Friday 8 September

Susannah Streeter, head of money and markets, Hargreaves Lansdown: “With higher interest rates causing a lack of urgency among buyers, with many would-be movers happy to sit on their hands and wait to ride out the mortgage storm, there is set to be a greater reluctance to sign on the dotted line. Even though Berkeley LON:BKG delivered a robust set of results at the last count, with pre-tax profits ticking higher, investors will be sniffing out any signs of weakness in forward sales guidance. The exemption of their housing from requirements designed to limit harmful chemicals being discharged into waterways, will mean plans for new developments are likely to be waved through more quickly.

This has helped sentiment towards Berkeley a little amid hopes it may ease blockages in the company’s development pipeline. Also, the group’s focus on London and its higher-end product should keep it a little more resilient amid the housing market headwinds, it won’t be immune to the increased caution.”

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

04-Sep
No FTSE 350 Reporters
05-Sep
Ashtead Group Q1 Results
DS Smith Q1 Trading Statement
06-Sep
Apax Global Alpha Half Year Results
Ashmore Group Full Year Results
Bakkavor Half Year Results
Barratt Developments Full Year Results
Darktrace Full Year Results
WH Smith Trading Statement
Halfords Trading Statement
07-Sep
Beazley Half Year Results
Currys Trading Statement
Direct Line Insurance Group Half Year Results
Energean Half Year Results
Eurowag Half Year Results
Genus Full Year Results
International Public Partnerships Half Year Results
Melrose Half Year Results
NMMPlaytech Half Year Results
Safestore Holdings Q3 Trading Statement
Synthomer Half Year Results
Vistry Group Half Year Results
WAG Payment Solutions Half Year Results
08-Sep
Berkeley Group Trading Statement
Computacenter Half Year Results
Petershill Partners Half Year Results
Spire Healthcare Half Year Results

Looking for great investing ideas? Sign up to our free newsletter.

Join us on WhatsApp

This article does not constitute investment advice. Make sure you do your own research or consult a professional advisor.

'How to' Guides

Our latest in-depth company reports

Detailed reviews of selected companies and investment trusts.

On the podcast

Sign up for great investing stock tips

Thanks to our Site Partners

Our partners are established, regulated businesses and we are grateful for their support.

Aquis
CME Group
FP Markets
Pepperstone

TMX
WisdomTree
IG
FxPro
Back To Top