Here’s our regular look at the FTSE 350 and a selection of other companies reporting from 18 to 22 April.
- As always, subscriber growth is the one to watch at Netflix
- Can Nestlé keep volumes growing despite having to raise prices?
- There’ll be a focus on what supply chain disruption means for Tesla
- We’ll see if Heineken’s premium and non-alcoholic offerings can keep up the momentum
Netflix, Q1 Results, Tuesday 19 April
Sophie Lund-Yates, Equity Analyst “The market didn’t react kindly when Netflix lowered subscriber expectations for this quarter. The media giant expects to add 2.5m subscribers, down from 4m a year ago. It’s crucial Netflix hits this target. The group says the slowdown comes because of the timing of new content, and there’s cautious optimism it will be able to reach the much needed 2.5m figure.
The only other thing that will really move the dial is any talk of margins. Expectations have been lowered, largely because of unfavourable currency movements. This sort of thing can’t be helped, so there’ll be a close eye on content costs instead. Competition in the sector is at fever pitch, and being the go-to streamer of choice means spending big bucks. While a big content bill is to be expected, it would be good to see margin expectations of 19 – 20% remain intact.
Any further information on Netflix’s foray into gaming would also be welcomed. Investing in this new area is one way to compete harder in the battle for our eyeballs. So far though, details are thin on the ground.”
Heineken, Q1 Trading Statement, Wednesday 20 April
Matt Britzman, Equity Analyst “2022 marks the second year in Heineken’s new strategy, EverGreen, as the group aims to future proof the business. A strong second half to last year, led by the performance of more premium brands like Moretti and Heineken, gives the group some momentum into 2022. This trend has been taking shape for a while, as lower beer consumption in developed markets has been accompanied by a shift to more premium brands. The latter’s a trend that needs to continue, as Heineken looks to open back up its spending taps and focus on the premium portfolio.
Heineken’s non-alcohol offering has been posting double-digit growth , with Heineken 0.0 leading the way. 2022 will see the group expand its offerings in the more health-conscious beverage sector with products like Desperados Virgin Mojito and Lagunitas non-alcoholic IPA . Next week’s update will hopefully shed some light on how performance has been in what should be an exciting growth avenue.
The group’s unlikely to give any specifics on margins next week, but commentary on how rising costs are being managed will be watched closely. Inflation was expected to remain a ‘significant’ headwind in 2022, albeit one that was managed well last year.”
Tesla, Q1 Results, Wednesday 20 April
Sophie Lund-Yates, Equity Analyst “Tesla is another big-tech hitter releasing results next week, and the most attention will be paid to the outlook statement. Chinese lockdowns mean Shanghai production has been shut down, and wider supply chain disruption is putting a dampener on wider EV trading. If production and deliveries are too badly impaired, it will throw Tesla’s operating leverage dynamics through a loop, taking margins with it. While indicators aren’t flashing red, it’s something to keep in mind.
Declines are also being seen in the value of regulatory credits the group receives. Tesla earns credits in recognition of its zero-emission vehicles and sells them to other manufacturers who need to offset their emissions. In the past Tesla has earned more credits as more vehicles have hit the road, but these credits are becoming less valuable, so there’ll be a focus on how this trend has progressed.”
Nestlé, Trading Statement, Thursday 21 April
Matt Britzman, Equity Analyst “Cost inflation and supply chain headwinds have been hurdles to overcome in recent trading periods. Nestlé’s arguably more exposed than some, with a volume led strategy that means raising prices isn’t the favoured way to get revenues moving. Testament to management then, that performance has been steady. Last we heard, organic sales for 2022 are expected to grow around 5% and next week’s trading update should shed some light on whether that outlook remains intact.
Pricing rose 3.1% in the final quarter of last year, to offset some of the headwinds mentioned above. Increased input costs aren’t going anywhere, so further price rises could be on the cards. That’s ok in the short term and doesn’t seem to be having a major impact on volumes yet. But prolonged reliance on raising prices could start to eat into volumes down the line.
On a product level, coffee was the strongest contributor to organic growth last year. With brands like Nespresso and Starbucks, the group should be well placed to capture demand and progress on the rollout of Starbucks branded products to new areas will be one to watch.”
FTSE 100, FTSE 250 and selected other companies scheduled to report
|Jtc||Full Year Results|
|Rio Tinto||Q1 Production Statement|
|Antofagasta||Q1 Production Statement|
|Bunzl||Q1 Trading Statement|
|Centamin||Q1 Production Statement|
|CRH||Q1 Trading Statement|
|Heineken*||Q1 Trading Statement|
|IntegraFin Holdings||Q2 Trading Statement|
|Oxford BioMedica||Full Year Results|
|QinetiQ Group||Trading Statement|
|Quilter||Q1 Trading Statement|
|AJ Bell||Q2 Trading Statement|
|Anglo American||Q1 Production Statement|
|Man Group||Trading Statement|
|Meggitt||Q1 Trading Statement|
|Relx||Q1 Trading Statement|
|Rentokil Initial||Q1 Trading Statement|
|SEGRO||Q1 Trading 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.