Companies Reporting: easyJet, LVMH, Pennon, Tesco

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

• easyJet should let us know if it’s on track for a full recovery this year following flight cancellations
• We’re expecting a mixed bag at LVMH with some recovery offset by Chinese lockdowns
• All eyes will be on how Pennon will play catch up to inflation
• Tesco looks to build on a strong Christmas period and deliver profits at the top end of previous guidance

easyJet, Half Year Trading Statement, Tuesday 12 April

Sophie Lund-Yates, Equity Analyst “Recent headlines have centred on easyJet’s cancelled flights because of employee cases of Covid. While this isn’t the end of the world looking at the long-term, it’s not exactly what the group needs. The short-haul carrier is in a better position than long-haul specialists, as people are likely more wary of travelling too far afield in the age of uncertainty and testing. But while easyJet had been staged to set a near full recovery by the end of this year, a lot of that rests on trading over the crucial warmer months. Easter plays a starring role in that.

There will therefore be a focus on any changes to guidance and whether the group expects a full recovery to take any longer. Unsurprisingly investors will also be looking out to see how well-hedged easyJet’s fuel position is. With oil prices still elevated, this could have an impact on expectations for full year underlying results.”

LVMH, Q1 Trading Statement, Tuesday 12 April

Sophie Lund-Yates, Equity Analyst

“There’s certainly a lot for LVMH to live up to in the first quarter. The Luxury retail conglomerate finished last year with revenue up 36%, at €64.2bn. The source of that strength came from strong growth in the Fashion & Leather Goods division – which houses famous names like Louis Vuitton and Christian Dior – as well as a good performance from Asia and the US. All eyes will be on how fresh lockdowns in China have affected the group’s sales. The Selective Retail arm, which houses Sephora along with travel business DFS, has been having a tougher time thanks to the ongoing effects of the pandemic. With travel habits slowly picking up as some restrictions ease, there’ll be hope of a more positive note compared to the 18% fall seen at the full year.”

Pennon, Trading Statement, Tuesday 12 April

Steve Clayton, HL Select Fund Manager “Water companies benefit from regulated prices that rise each year with inflation. But operating costs rise first, and so the companies are playing catch-up when inflation is on the rise. How Pennon is managing this juggling act will be of great interest to analysts. Pennon’s dividend policy of raising the pay out by 4% ahead of inflation each year has made it an investors favourite. This, plus the potential for the company to fund deals, given the deleveraging of the balance sheet after the Viridor disposal will keep all eyes on the group when it releases a trading statement next week.”

Tesco, Full Year Results, Wednesday 13 April

Matt Britzman, Equity Analyst “After a strong Christmas, where the group built its UK market share to the highest point in the past 4 years, strong numbers are expected in next week’s full-year results. Management raised operating profit guidance for its Retail and Banking divisions, with markets expecting group operating profit in the region of £2.75bn. But that doesn’t mean there haven’t been challenges. Like the industry as a whole, Tesco’s faced supply chain pressures. But the group’s managed these relatively well so far, and in January management said that they expect things to ease further which should help costs to some extent.

Cost inflation, however, is ahead of group expectations and looks to be running around 5%. That puts pressure on the group to keep prices in line with low-cost competitors. Margins could come under pressure, so we’re keen to hear what else the group can do to bring costs down. Online competition is another area of focus, and one that Tesco took a leading position in over the pandemic, bringing on some 1.2m new customers. About half of those look to have stuck around for now, and whilst management are confident they’re here to stay, investors will be looking for proof in the numbers.”

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

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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