Companies Reporting: British American Tobacco, Inditex, Wizz Air

Our regular look at the FTSE 350 and a selection of other companies reporting from 5 – 9 June.

• Can British American Tobacco continue to drive growth from new products
• Will Inditex remain in fashion with consumers?
• Wizz Air recovery still has a long road ahead

British American Tobacco, Trading Statement, Tuesday 6 June

Matt Britzman, equity analyst, Hargreaves Lansdown: “With a fresh CEO at the helm, the shift away from traditional combustibles looks set to continue at British American Tobacco LON:BATS. The new man in the hot seat, Tadeu Marroco, has over 30 years of experience in the business, so don’t expect any radical changes to the strategy.

Full-year results back in February pointed to continued growth in the new categories division, which houses heated tobacco and vape products. As it becomes harder to squeeze growth from the traditional tobacco portfolio, focus on the performance of the new categories division will continue to heat up. Profitability in this area is the next major milestone, now expected in 2024, earlier than initially expected.

The lack of buyback along with full-year results wasn’t met too kindly by markets, as debt reduction becomes a bigger priority. There was chatter that buybacks will be reassessed as the year progresses, so it’s something to watch for in next week’s trading update. For a business like BATS, returning cash is a big part of the near-term investment case, so decisions around its use have scope to move the dial.”

Industria de Diseno Textil, Q1 Results, Wednesday 7 June

Aarin Chiekrie, equity analyst, Hargreaves Lansdown: “Zara’s parent company, Inditex [BME:ITX], seemed to do everything right last year. Sales and profits grew at double-digit rates, highlighting the success of the group’s strategy which prioritises closing smaller stores and focusing on bigger ones in prime locations. The tactic meant that store sales grew 23% despite stores falling by 10%, contributing to the group’s improved operating margins.

Next week’s results will give investors some steer as to how the latest Spring/Summer collections have been received by customers. The group’s relatively high price point compared to other high-street fashion chains raises some concerns, given the rising demands on consumers’ cash right now. If key brands like Zara, Pull & Bear or Bershka end up falling out of fashion, investors could see margins come under pressure.”

Wizz Air, Full Year Results, Thursday 8 June

Aarin Chiekrie, equity analyst, Hargreaves Lansdown: “Wizz Air delivered some promising results last time out. Ticket pricing and demand remained strong across Wizz Air’s routes and, crucially, the group had the capacity to greet it. Investors saw passenger numbers jump nearly 60% to 12.4m in the third quarter which led to revenue more than doubling to around €912m.

Last analysts heard, Wizz Air LON:WIZZ are still on the hook for around £5m-worth of unpaid refunds as a result of delays and cancellations. It’ll be interesting to see if low costs continue to trump poor service, especially as consumers’ disposable incomes remain stretched by the cost-of-living crisis.

Operational adjustments have led to fewer flight disruption costs recently. A strengthening Euro has also offered some relief to inflating fuel costs, but these still rose by north of 60% last quarter, leading the group to expect an overall net loss in next week’s results.”

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