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Companies Reporting: Associated British Foods, DS Smith, Berkeley

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Here’s our regular look at the FTSE 350 and a selection of other companies reporting from 20 – 24 June.

  • ABF will reveal how resilient Primark shoppers are with prices set to rise.
  • We’ll see if the slowdown in online shopping is being felt for packaging giant DS Smith.
  • Cost inflation remains in focus for Berkeley Group.

Associated British Foods, Q3 Trading Statement, Monday 20 June

Laura Hoy, Equity Analyst “Inflation will be the word of the day when Primark owner Associated British Foods reports. The group’s buoyant half-year sales were back to pre-pandemic levels as stores reopened and shoppers headed out to refresh their wardrobes. The surge in demand fed through to a 92% increase in operating profits—but the good times might not continue if rising costs continue to eat into margins.

Management warned that the group’s cost saving efforts haven’t been able to keep pace with inflation. The result will be margin pressure and price increases across the autumn and winter stock. There are still a few months to see whether Primark’s price-sensitive customers will be receptive to larger price tags. Demand so far this year in the face of the current cost of living crisis will give us an idea of how resilient customers are. At last check, underlying operating margins stretched above 11%, but the big question will be whether that continued to expand in the third quarter.”

DS Smith, Full Year Results, Tuesday 21 June

Sophie Lund-Yates, Equity Analyst “Cardboard-box maker DS Smith has been handling soaring inflation well. As an essential part of supply chains, it’s been able to pass on higher costs to its customers. Specifically, DS Smith has been partly buoyed by its exposure to e-commerce. Recent figures show the pandemic-induced boom in online shopping is slowing down, so we wonder if this has been felt in DS Smith’s results.

There will also be an eye kept on any news of volumes. There does come a point, even for the most resilient businesses, where price increases can start to eat into demand. DS Smith doesn’t quite look to be in this danger zone, but it’s something to monitor.

The classic metrics are still a focus too. The group’s expecting underlying operating profit of £605m – £615m. As things stand, DS Smith is expected to meet this – although of course nothing’s guaranteed.”

Berkeley Group, Full Year Results, Wednesday 22 June

Matt Britzman, Equity Analyst “Berkeley’s seen sales recover to pre-pandemic levels, with analysts expecting a beat on the group’s own £518m pre-tax profit guidance. Stable footing supported the recent £400m cash purchase of the remaining 50% stake in St William Homes, which was a joint venture with National Grid. That’s expected to help push forward sales, which are an important measure of future demand, up to the £2bn mark.

Having recently signed the government fire safety pledge, Berkeley has essentially agreed to fix all cladding issues on buildings over 11m, which largely put the issue to bed. The group hasn’t given any specifics as to how much that could cost, so an estimate could be on the cards.

The other key item to watch for relates to increasing build costs. Berkeley’s London focus and high average selling price means margins have been strong in the past. Previously, normal levels of cancellations and healthy house prices have been offsetting rising costs. So, commentary on operating margins and expected build cost inflation will be watched closely.”

FTSE 100, FTSE 250 and selected other companies scheduled to report

20-Jun
Associated British FoodsQ3 Trading Statement
21-Jun
DS SmithFull Year Results
Safestore HoldingsHalf Year Results
Telecom PlusFull Year Results
22-Jun
Berkeley Group HoldingsFull Year Results
Liontrust Asset Management PLCFull Year Results
Micro Focus InternationalHalf Year Results
23-Jun
Serco GroupTrading Statement
24-Jun
No FTSE 350 reporters

This article is 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.

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Please note this article does not constitute investment advice. Investors are encouraged to do their own research beforehand or consult a professional advisor.

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