Our regular look at the FTSE 350 and a selection of other companies reporting from 21 – 25 August.
- BHP is expected to see revenue and profits drop as commodity prices come down
- AI demand will be front and centre at Nvidia
- Recruitment giant Hays is expected to report weaker fees
BHP Group, Full Year Results, Monday 21 August
Matt Britzman, equity analyst, Hargreaves Lansdown: “Recent production details from BHP pointed to a good final quarter, with Western Australia Iron Ore reaching record production levels. But consensus is next week’s full-year results will likely show a decent-sized decline in revenue and profit, as the prices of iron ore, copper and coal have come down from levels seen in the previous financial year.
Guidance for the new year on the production side was a little lighter than expected. Aside from the benefits from the recently acquired OZ minerals, there looks to be limited upside from other avenues coming over the next year or so.
Costs and margins will also be in focus, as inflation’s been a headwind for the entire sector over the past year. Guidance for costs over the new year was slightly higher than markets were expecting, but caution in the current environment isn’t too surprising.”
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Nvidia, Q2 Results, Wednesday 23 August
Sophie Lund-Yates, lead equity analyst, Hargreaves Lansdown: “NVIDIA has been on an exciting journey this year, with the valuation seeing a 205% uplift since January. This all hinges on optimism around the use of the group’s hi-tech chips, which are favourites for AI products. Coupled with a substantial earnings beat last quarter, hopes are high. Analysts are optimistic that AI-related demand will have remained elevated at levels high enough to satisfy investors.
But, keep in mind, the frothier valuation does increase the chance of disproportionate reactions should there be any disappointment from next week’s results. Guidance was for second-quarter revenues of about $11bn – so this is the benchmark to watch.
Guidance for demand in the new quarter will also move the dial, especially any commentary around the effect of supply constraints. And the final piece of the puzzle won’t be linked to AI, but gaming. This industry is what Nvidia was built on, and investors want to see if there’s been any let up in the challenging consumer environment.”
Hays, Full Year Results, Thursday 24 August
Sophie Lund-Yates, lead equity analyst, Hargreaves Lansdown: “Recruitment giant, Hays, reported a weakening of recruitment activity back in July. This could signal a slowdown in the UK jobs market, which is a problem for companies that make money from placing people in new roles. In the fourth quarter, Hays saw a 2% drop in overall net fees, largely because of slower hiring conditions in the UK & Ireland, reflecting tougher economic conditions. This trend isn’t expected to have fully reversed in next week’s results. But the group’s said it expects to deliver full-year operating profit in line with market expectations of £196m – and this should be achievable.
Something to keep in mind is Hays’ efforts to pivot away from its reliance on more cyclical industries and towards growth areas. Tech and Engineering now make up over a third of total net fees, up from 14% in the great financial crisis. This won’t stop declines in performance in the face of recession, but it should increase resilience – investors will be keen to find out if the net fee distribution has shifted any further into these more favourable areas.”
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
|BHP Group [LON:BHP]||Full Year Results|
|John Wood Group [LON:WG.]||Half Year Results|
|Nvidia [NASDAQ:NVDA]||Q2 Results|
|CRH [LON:CRH]||Half Year Results|
|Harbour Energy [LON:HBR]||Half Year Results|
|Hays [LON:HAS]||Full Year Results|
|No FTSE 350 Reporters|