Companies Reporting: Fevertree, Inditex, Tullow Oil

Our regular look at the FTSE 350 and a selection of other companies reporting from 12 – 16 September 2022.

• Fevertree will reveal the impact of ‘significantly’ worsened cost headwinds
• The impact of higher inventory will be in the spotlight for Inditex
• Tullow Oil will provide an update on profits and the upcoming merger

Fevertree, Half Year Results, Tuesday 13 September

Charlie Williams, Equity Research Assistant, “Fevertree’s already set the scene for what’s to come at their half year results next week. Revenue is expected to grow 14% to £160.9m, reflecting a strong performance in Europe and continuing demand in the US. Management also maintained its full year revenue guidance. Attention will now be focused on costs, as previous headwinds felt earlier in the year have ‘significantly worsened’ in recent months, leading to a downwards revision of gross margin.

Investors will be keen to understand how long these impacts will last. Labour shortages in the US and limited glass availability have restricted the ability to sell products despite strong demand, and it will be interesting to see if there is an update from management on the initiatives in place to help mitigate the issues going forward.”

Inditex, Half Year Results, Wednesday 14 September

Charlie Williams, Equity Research Assistant, “Global fashion retailer, Inditex, has come out of the pandemic with all cylinders firing. Strong performance in the early part of this year’s been helped by increased traffic to stores and continued digital sales.

That said, Inditex has continued to increase inventory ahead of schedule to reduce the impact of supply chain constraints in the upcoming season. The rising cost of living has put a dent in consumer finances and increases the likelihood inventory won’t sell, leaving the door open for write-downs in the value of remaining stock. While we don’t expect this from Inditex yet, an indication of how well stock’s being sold should provide comfort to investors.

The group’s also been pushing its optimisation plan of higher digital investment and a streamlined portfolio of stores, focusing more on prime locations. This should be completing soon, and the benefits have already been felt on margins. Investors will be watching on to see if the digital investment has continued to reap rewards.”

Tullow Oil, Half Year Results, Wednesday 14 September

Charlie Williams, Equity Research Assistant, “Tullow Oil recently announced the merger with Capricorn Energy, which hopes to benefit from cost savings and robust cash generation. This isn’t set in stone though, and shareholders will get to vote at the back end of the year. Still, this is something investors should be wary of when listening to management’s take on the situation.

The company’s benefitted from higher oil prices and expects to generate healthy free cash flow of $200m for the full year, assuming an average oil price of $95 a barrel. That said, due to one-off charges and gains on assets, free cash flow is expected to be neutral for the first six months of the year. Further reassurance that the full-year target’s intact would go down well.

Revenue is expected to be slightly above last year. As the company continues a strong focus on costs, investors will be looking to see how profits have fared after a turbulent few years.”

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

• Tullow Oil shares up nearly 24% on Ghana tax victory
• Three Quick Facts: Tullow, Chapel Down, Versarien
• Three Quick Facts: Trainline, Renishaw, Fevertree