Companies Reporting: Next, Haleon, Apple, J Sainsbury, Shell

Our regular look at the FTSE 350 and a selection of other companies reporting from 30 October – 3 November

• Will Next’s full-year profit guidance remain intact?
• Flu season is just around the corner for Haleon
• Apple needs to grow in order to prosper
• Margins will be in focus at J Sainsbury
• Shell has been feeling the effects of lower energy prices

Next, Q3 Trading Statement, Wednesday 1 November

Aarin Chiekrie, equity analyst, Hargreaves Lansdown: “Fashion retailer, Next, is in the process of transitioning from a UK store-based retailer into a multi-channel retail platform with a wide geographic reach. The recent £115.2m FatFace acquisition signals the group’s intent to expand its Total Platform – a service which allows third-party retailers to make use of Next’s online software and infrastructure. Despite the acquisition, Next commented that its £875m full-year pre-tax profit won’t be materially affected. Next week’s trading update should paint a clearer picture as to whether that’s still the case as the all-important Christmas trading period draws near.

Investors will also be keeping a close eye to make sure the full-price sales outlook remains on track. This is a key metric for Next, and arguably the main driving force behind overall performance. It’s a tricky strategy to nail, especially alongside expanding its online presence and introducing third-party brands into its offering. But, if the group can execute well here, it’ll be a clear sign to the market that Next remains a top dog in the UK retail industry.”

Haleon, Q3 Trading Statement, Thursday 2 November

Steve Clayton, head of equity funds, Hargreaves Lansdown: “Investors expect to see a modest slowing of organic like-for-like sales, with growth strongest in some of Haleon’s emerging market territories, like Latam. Respiratory looks to have continued to benefit from a strong year for cold and flu and should remain a major contributor to the quarter’s growth. Strong Respiratory potentially leads to a “halo effect” for Pain and Vitamin, Minerals and Supplements in the quarter. Overall, expect a confident outlook statement – as always with the proviso that, in the short term, much depends on the virulence of the coming winter’s flu season.”

Apple, Q3 Results, Thursday 2 November

Sophie Lund-Yates, lead equity analyst, Hargreaves Lansdown: “Just like its namesake, the Apple needs to grow in order to prosper. Investors need to see a clearer growth pattern emerge before excitement can be unleashed where Apple’s concerned. Last quarter, Apple’s net sales were 1.4% lower than the previous year led by a drop in iPhone sales. Growth is likely to remain muted.

There’s a long-standing debate swirling around how resilient and loyal Apple’s customers are. As the cost of living globally remains elevated, there will be a limit to how many people are prepared to spend on big ticket items. Apple’s strong brand should limit any sharp falls in demand from cropping up, but that’s not the only part of the business case.

The services division (think AppStore and Apple Music) is likely to have continued growing. This helps underpin profits because margins in software are more attractive than in manufacturing physical goods. The crucial part to all of this will be any hint on the outlook as we head into Christmas – it’s this trajectory that has the ability to move markets.”

J Sainsbury, Half Year Results, Thursday 2 November

Sophie Lund-Yates, lead equity analyst, Hargreaves Lansdown: “Sainsbury’s has been putting a lot of effort into staying competitive, with initiatives like Aldi price match. With grocery inflation still proving significant, shoppers have been looking for deals, making the landscape very competitive. We’d like to know what this means for margins. Cutting prices is all well and good so long as volumes pick up the slack. The group’s expecting full-year underlying pre-tax profit of £640 – £700m and analysts are cautiously optimistic this goal remains intact. The keep-prices-low approach helped first-quarter grocery sales rise 11%.

Sainsbury also has high exposure to general merchandise because it owns Argos. This area could be vulnerable to a steeper slowdown and investors will be monitoring how things have been going. That also makes the outlook statement very important – the next trading season is all about Christmas and this will give an indication of how consumer spending’s expected to hold up.”

Shell, Q3 Results, Thursday 2 November

Susannah Streeter, head of money and markets, Hargreaves Lansdown: ‘’At the last count, Shell had been feeling the effects of lower energy prices, but oil prices have steadily crept up over the summer, with tension in the Middle East leading to another spike in prices. Brent Crude flirting with the psychologically important $100-dollars-a-barrel level has helped push up Shell’s share price to an all-time high. This trend for higher crude prices is set to show up as an increase in upstream revenue compared to the previous quarter.

Oil supply and demand is likely to stay unpredictable and governed by geo-political developments, as well as global economic forecasts. But the decision by Saudi Arabia and Russia to cut production until the end of the year is keeping a higher floor on prices. Shell is also a leading supplier of Liquified Natural Gas and, although scheduled maintenance may have kept the taps tighter on production, LNG volumes are still expected to be higher compared to the previous quarter. Given the tight supply in the market, earnings from gas trading are also expected to have rebounded as the company makes higher margins diverting gas away from other regions to Europe where it’s still in high demand.’’

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