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Companies Reporting: BP, Rolls-Royce, GSK, Next, Sainsbury

Companies Reporting: BP, Rolls-Royce, GSK, Next, Sainsbury

Our regular look at the FTSE 350 and a selection of other companies reporting from 31 October to 4 November 2022.

  • Will lower oil prices make BP rethink on buybacks?
  • Rentokil Initial provides their first trading update since completing the $8bn acquisition of Terminix Inc
  • It will be revealed whether GlaxoSmithKline (GSK) can beat the market again and draw a line under Zantac litigation
  • Can Next avoid mass discounting to shift stock?
  • J Sainsbury will show whether a fresh round of investment can help it cling onto market share
  • Rolls Royce’s Q3 Trading Statement likely to show more baby steps of recovery

BP, Q3 Results, Tuesday 1 November

Derren Nathan, Equity Analyst, “With oil prices down roughly a quarter since their June highs, it’ll be interesting to see how BP LON:BP. fared following a bumper set of interims in August. BP has been spending heavily on both distributions to shareholders, but also refocussing the business on more sustainable energy source. Most latterly this month’s acquisition of US Bioenergy company Archaea for $3.3bn. Archaea exploits the biogas which is a by-product of landfill and farming.

When it comes to renewables BP is really putting the pedal to the metal. Its Joint Venture Lightsource is breaking ground on its largest UK solar energy project to date which could be powering 19 million homes by 2025. Given its wide network of refuelling stations, BP is also in a strong place for helping deliver new energy sources to transportation and has recently teamed up with car-rental firm Hertz to deliver a network of charging stations for Electric Vehicles in North America.

Investors will see if BP pauses for breath on its share buy-back program following its recent investment spree. In the second quarter BP spend $2.5bn on repurchasing its own shares, a figure set to accelerate to $3.5bn in the 3rd quarter to be reported next week”.

Rentokil Initial, Q3 Trading Statement, Tuesday 1 November

Steve Clayton, Fund Manager, HL Select, Rentokil Initial LON:RTO provide their first trading update since completing the $8bn acquisition of Terminix Inc earlier this month. Investors will be looking for any details on integration plans. Terminix gives the enlarged group a much greater scale of operations in the US Pest Control division, already Rentokil’s largest division. But with the deal having been struck at a high price, Rentokil has to deliver on the expected $150m p.a. of synergies it has said it can extract.

Margin guidance is critical here – some analysts have claimed that Rentokil’s margins were boosted unsustainably by pandemic-driven sterilisation contracts and as these fall away the group’s underlying margins could prove lower than previously expected.”

GSK, Q3 Results, Wednesday 2 November

Derren Nathan, Equity Analyst, “In next week’s third quarter results, many will be looking to see if GSK LON:GSK can continue its recent run of beating analyst estimates, as well as its own growth targets. On a reported basis GSK is likely to benefit from currency tailwinds generated by a strong US Dollar. It will be good to see if this has translated into strong cash flow to support the 4% prospective dividend yield and continued debt reduction following the demerger of Consumer Health Division Haleon ($HLN) in July.

Investors hope to be updated on developments in GSK’s late-stage development pipeline, which over time could provide a material uplift to revenues. Since the interims, GSK’s received FDA approval of a more user-friendly formulation for its Meningitis vaccine Menveo.

GSK recently posted exciting data for its respiratory syncytial virus (RSV) vaccine where it’s going head-to-head with arch-rival Pfizer. Further, many await an update on Zejula which could offer hope to hard-to-treat sufferers of ovarian cancer. It is also hoped that GSK meet head-on the question of the Zantac litigation, which is currently weighing heavily on sentiment.”

Next, Q3 Trading Statement, Wednesday 2 November

Matt Britzman, Equity Analyst, “Markets were rightfully disappointed at the half year mark, back in September, when Next LON:NXT  issued its second profit downgrade of the year. Soaring inflation means the cost-of-living crisis looms heavy over the group’s customer base and regardless of management’s best efforts, margins are likely to feel the squeeze.

Next’s upcoming trading update should shed further light on how consumer spending is shaping up. Watch out for updates on full-priced sales in the quarter just gone, and the outlook moving forward. Inventory levels across the industry have been growing and for competitors that’s meant heavy discounting and even full-blown write offs. No news could well be good news where inventories concerned, but investors should prepare to hear further discounts are on the cards.

Any updates on the overseas expansion will be welcome, margins have been under pressure for some time as duty and delivery costs rise. Whilst Sterling’s weakness should provide a margin tailwind, any information on prices, and whether hikes are on the cards will be watched.”

J Sainsbury, Half Year Results, Thursday 3 November

Susannah Streeter, Senior Investment and Markets Analyst, ‘’Shoppers are being super-vigilant about what to put in their shopping baskets and that’s already been reflected in a fall in grocery sales at J Sainsbury LON:SBRY in the first quarter, as the group adjusts not only from high demand in 2021 but the worsening cost-of-living crisis. Investors will keep a keen eye on whether full year underlying profit is still set to come in between £630 million and £690 million but it is beginning to look more likely it’ll come in near the lower range, with signs back in the summer that customers were watching every penny and every pound.

There is also evidence in the latest ONS retail sales figures that shoppers are tightening their belts even more than forecast which also doesn’t bode well for own brand homeware and Argos ranges. However, a fresh round of investment in keeping prices low means the group’s been able to offer its strongest value proposition in years, which should help it cling onto market share, despite being hit with plenty of headwinds in the second quarter with a fresh storm brewing for the month to come.”

Rolls-Royce, Q3 Trading Statement, Thursday 3 November

Susannah Streeter, Senior Investment and Markets Analyst, ‘’While the worst might be over for Rolls Royce LON:RR., there’s still a long way to go to recover from the pandemic hit to the business, especially given how the war in Ukraine exacerbated the inflationary issues causing such turbulence. Underlying revenues have shown signs of improvement particularly for the Power Systems market and steady steps are being taken in Civil Aerospace as well. But the company has still been experiencing supply chain difficulties at the half year mark, so investors will be keeping a close watch on any signs they may be easing off.

Given that its core business is manufacturing and servicing engines for larger longer haul planes, the forecast that so-called ‘engine flying hours’ won’t be back at pre-pandemic levels for a few years yet, means it’s still going to be pretty tough going for the company. Restructuring efforts are helping Rolls Royce weather the considerable storm it’s been going through, with disposals helping shore up the balance sheet, but debt levels will still be a concern.

The bright spot among the gloom is its military contracts, a small but valuable part of the portfolio, so a significant level of income will still be guaranteed particularly as countries pledge to up their defence spending.’’

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

31-Oct
No Covered Reporters
01-Nov
BP Q3 Results
IWG Q3 Trading Statement
NCC Group Q3 Results
Rentokil Initial Q3 Trading Statement
TP ICAP Group Q3 Trading Statement
02-Nov
Wizz Air Half Year Results
GlaxoSmithKline Q3 Results
Hiscox Q3 Trading Statement
Morgan Sindall Group Trading Statement
Next Q3 Trading Statement
Novo Nodisk Q3 Results
Smurfit Kappa Group Q3 Trading Statement
Weir Group Q3 Management Statement
03-Nov
Barrick Q3 Results
BT Group Half Year Results
Derwent London Q3 Corporate Sales Release
Harbour Energy Q3 Trading Statement
Helios Towers Q3 Results
Hikma Pharmaceuticals Trading Statement
Howden Joinery Group Q3 Trading Statement
J Sainsbury Half Year Results
Lancashire Holdings Q3 Trading Statement
Paypal Q3 Results
Rolls-Royce Holdings Q3 Trading Statement
RS Group Half Year Results
Smith & Nephew Q3 Trading Statement
TI Fluid Systems Q3 Trading Statement
Trainline Half Year Results
04-Nov
4imprint Group Trading Statement
Apax Global Alpha Q3 Results
Morgan Advanced Materials Q3 Trading Statement
TBC Bank Group Q3 Trading Statement

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