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Companies Reporting: J D Wetherspoon, Rio Tinto, Burberry Group

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Here’s our regular look at the FTSE 350 and a selection of other companies reporting from 11 – 15 July 2022.

  • J D Wetherspoons needs to keep sales creeping higher in Q4 if it wants to break even at the full year.
  • It will be revealed whether the post-pandemic borrowing boom continued when Experian
  • An uncertain global economy and falling iron ore prices will test Rio Tinto
  • Heightened exposure to China raises some questions for the Burberry Group.

J D Wetherspoon, Q4 Trading Statement, Wednesday 13 July

Matt Britzman, Equity Analyst, “With restrictions now firmly in the rear-view mirror, Wetherspoon’s been able to improve sales, albeit slowly. Like-for-like sales in the last couple of weeks of the third quarter were slightly positive. We’ll find out in next week’s trading statement whether that has continued into the fourth quarter.

The main story will likely focus on inflation, and the group has raised prices already this year to battle rising costs. In March, cautious consumers hadn’t impacted trading. Given the cost-of-living crisis has evolved since then, it’ll be interesting to hear whether that trend has shifted at all.

From an operational standpoint, higher costs from labour, food and energy have already been called out as significant headwinds. It will be interesting to see if there is any indication as to how that’s being managed. It has been reported that the group expected to break even on profits for the full year, with cost increases 1 or 2% below inflation.”

Experian, Q1 Trading Statement, Thursday 14 July

Laura Hoy, Equity Analyst, “Experian’s been riding high on a post-pandemic borrowing boom and first quarter results should show more of the same. Revenue is expected to jump more than 8% to £3.3bn and work on boosting margins over the past year means operating profits should jump at an even faster clip. This indicates little about what is to come, though, as we march into an increasingly gloomy economic backdrop. Management commentary on what to expect, and whether revenue growth between 7% and 9% is still achievable, will be of interest.

The latest lending data shows credit card debt’s risen over 11% in the UK, suggesting as finances tighten the need for loans is on the rise. Experian’s position as a middleman between lenders and borrowers puts it in a sweet spot to capitalise on that trend. Not to mention the newly revamped consumer business will have a chance to shine with new tools to help people save money on bill repayments and new loans.”

Rio Tinto, Q2 Production Statement, Thursday 14 July

Susannah Streeter, Senior investment and markets analyst “Investors sense there is trouble ahead for the global economy, and uncertainty about the outlook has been weighing on Rio Tinto particularly because of falling iron ore prices, which has approached levels not seen since January. Rio Tinto is a major producer of iron ore, which accounted for just under three quarters of underlying profits last year.

Rio has already been shifting its efforts to capitalise more on commodities that support decarbonisation. The proposed Turquoise Hill deal will boost its stake in what’s expected to be one of the biggest copper mines in the world. Investors will want to see that diversification trend to continue given the uncertain outlook for iron ore. Despite miners typically being a good hedge for an inflationary environment, they aren’t immune to input cost rises which weigh on margins. The good news is Rio’s balance sheet and low base costs give it the firepower to invest in growth should opportunities arise and the resilience to help weather a downturn.”

Burberry Group, Q1 Trading Statement, Friday 15 July

Sophie Lund-Yates, Equity Analyst, “Back at the full year mark, underlying revenue rose 23% to £2.8bn, which was 10% ahead of pre-pandemic levels. Analysts are expecting a 44.7% drop in the first quarter, which reflects ongoing uncertainty on consumer spending in China. Heightened by renewed lockdowns in recent months. The market has already reacted to this, with the valuation coming under pressure over the last few months. However, a worse than expected dip in revenues, or a shaky outlook statement could see further market reactions.

In fact, the outlook statement is something to watch. Burberry has more exposure to China than its peers – one third of the whole compared to a quarter for others. It is predicted that the situation in Asia is going to take some time to unwind, so it’s unlikely to be an immediate road to recovery for Burberry.”

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

11-Jul
No FTSE 350 Reporters
12-Jul
Grafton Group Trading Statement
13-Jul
Tullow Oil Q1 Trading Statement
J D Wetherspoon Q4 Trading Statement
Pagegroup Half Year Results
14-Jul
Ashmore Group Q4 Asset Under Management Statement
Barratt Developments Q4 Trading Statement
Dr Martens Q1 Trading Statement
Experian Q1 Trading Statement
Hays Q4 Trading Statement
Rio Tinto Q2 Production Statement
Severn Trent Q1 Trading Statement
15-Jul
Burberry Group Q1 Trading Statement
Ninety One Q1 Asset Under Management Statement

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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This article does not constitute investment advice. Do your own research or consult a professional advisor.

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