Companies Reporting: Fevertree, Tesla, LVMH

Our regular look at the FTSE 350 and a selection of other companies reporting from 22-26 January.

• Will the increasingly complex picture for energy benefit Baker Hughes?
• Verizon attempts to revive consumer phone business
• Questions over EV profitability disappoint Tesla investors
• Fevertree hoping to avoid missing expectations again
• LVMH shows signs of slowing

Baker Hughes – Q4 Results, Tuesday 23 January

Derren Nathan, head of equity research, Hargreaves Lansdown “Baker Hughes reported strong business growth in each of the first three quarters of 2023. That was reflected in revenue and profit as well as increased order intake in both Oilfield Services & Equipment (OFSE) and Industrial & Energy Technology (IET). The midpoint of guidance for the final three months suggests that revenue has increased by around 17% to $6.9bn, with underlying cash profit (EBITDA) up about 14% to $1.1bn.

Looking to 2024, it’s a complex picture. Oil prices have cooled lately, but sustained tension in the Middle East could see this trend reverse. Meanwhile, The Conference of Parties has, for the first time, called for a transition away from fossil fuels at last month’s COP28 in Dubai. Continuing softness in US domestic drilling activity is also something to be mindful of. But Baker Hughes doesn’t have all its eggs in one basket and continues to innovate in both traditional and new energy technologies.”

Verizon Communications – Q4 Results, Tuesday 23 January

Matt Britzman, equity analyst, Hargreaves Lansdown “Verizon has built up a bit of traction and investors will be hoping for continued momentum in next week’s fourth-quarter results. Revenues expected to come in at around $34.55bn with earnings per share of $1.08.

One of the key questions for investors is whether Verizon can deliver continued and sustained post-paid wireless phone subscriber growth. In this regard, the consumer unit has been struggling, offset somewhat by growth in business users. The trend is improving off the back of new initiatives and leadership changes, but growth continues to lag peers. Investors will be watching for commentary on how Verizon plans to drive further improvements over the coming year.”

Tesla – Q4 Results, Wednesday 24 January

Susannah Streeter, head of money and markets, Hargreaves Lansdown “Tesla has been disappointing investors with shares falling 11% year to date, as questions are raised over profitability amid an EV price war. Amid this discounting, Tesla has been forced out of pole position by BYD. The Chinese automaker has taken the crown as the world’s biggest-selling manufacturer of EVs, after it topped Tesla’s numbers by selling a record 526,000 battery-only vehicles in the last three months of 2023. It was already getting tougher for Tesla in China before the latest price war took hold. Tesla had reduced costs of popular models to increase sales but has been hit by a storm of competition as BYD unveiled a super-aggressive pricing campaign at the end of the year.

This development is further evidence of China’s growing clout in the EV industry, helped by deep battery supply chains. While it’s the world’s leading supplier of rechargeable batteries, Tesla relies on several suppliers and has flagged shortages of lithium as demand ratchets up as a supply chain obstacle in the years to come.  Despite worries about margins, it’s important to stress that Tesla has an excellent product, with enviable brand recognition around the world. If production can be ramped up at pace, the horizon for more attractive per-unit costs looks promising.”

Fevertree – Full Year Results, Thursday 25 January

Aarin Chiekrie, equity analyst, Hargreaves Lansdown “Fevertree’s results in recent times have been anything but dull. Back at the half-year mark, sales came in at around £175.6mn, or 2% weaker than the market was expecting. Unseasonably poor weather in the UK was blamed for a lacklustre summer trading period. And coupled with falling margins, the group lowered both its top and bottom line outlook for the full year.

Markets are now expecting full-year revenue to grow by around 11.6% to £384mn. Successful expansion in its growing US and European markets will be key to hitting this target. Any further disappointments in full-year results next week would likely put more pressure on the tonic maker’s valuation, which is down around 60% over the last 2 years.”

LVMH – Full Year Results, Thursday 25 January

Susannah Streeter, head of money and markets, Hargreaves Lansdown “With aspirational shoppers showing signs of tightening their belts, the shine is coming off big brand power. LVMH revenues had already shown signs of slowing, with declines led by the Wine and Spirits business. However, fashion and leather goods sales were still proving super resilient, climbing even higher, testament to super-slick creative marketing campaigns, and the fact that well-heeled core customers are insulated from economic headwinds. However, weakness in the Chinese market is still a cause for concern, with growth numbers coming in below expectations in the last quarter. With the property market fragile, it makes Chinese consumers that little bit less confident about their wealth, and willingness to spend on luxuries may weaken. Investors are cautious about what these results will bring, particularly given Burberry flagging falling sales in Europe.”

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