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Companies Reporting: NVIDIA, Reckitt Benckiser, Natwest Group

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Here’s our regular look at the FTSE 350 and a selection of other companies reporting from 14th to 18th February.

  • We’ll be looking at margins to see how inflation is affecting Heineken
  • A dividend increase is expected at Primary Health Properties
  • We expect a positive tone at NVIDIA’s results despite the failed takeover of ARM
  • Reckitt Benckiser will reveal whether cold and flu season boosted Health sales
  • Detail expected on what interest rate rises mean for Natwest Group

Heineken, Full Year Results, Wednesday 16 February

Laura Hoy, Equity Analyst “With pandemic-related restrictions starting to ease in most of Heineken’s markets, our focus has turned to rising costs. The group called out inflationary headwinds at the half-year, at the time managing through with cost cutting and price increases. But we’re wondering if those measures were enough to offset persistent input cost hikes throughout the second half.

There’s only so much foam to pour off, and at some point price hikes will cut into volumes. Heineken [AMS:HEIA] is toeing a fine line here, as volumes declined across three of its four geographic sectors in the third quarter. It’s possible the group had to swallow some of the inflationary headwinds, which would weigh on profits and cashflow. We’ll be keeping an eye on whether the difficult environment fed the group’s growing debt pile—which stood at 3 times cash profits at the half-year mark.”

Primary Health Properties, Full Year Results, Wednesday 16 February

Steve Clayton, HL Select Fund Manager Primary Health Properties [LON:PHP] reports full year results on 16 February, and we expect them to reveal steady progress with acquisition activities having been tilted toward Ireland, where rental returns are strongest. The group has a significant development pipeline, along with an ongoing asset management activity geared toward retaining occupiers and adding value to the properties in return for lease extensions. PHP’s occupiers have played a key role in the vaccination programme which has only served to reinforce the importance of a strong primary healthcare system at the heart of the NHS and Ireland’s HSE. We expect to see a dividend increase approaching 5% for the year ahead, marking the 26th consecutive year of increases from PHP.”

NVIDIA, Q4 Results, Wednesday 16 February

Sophie Lund-Yates, Equity Analyst “Headlines have been dominated by NVIDIA’s failed $40bn takeover of Softbank’s Cambridge based chip designer, ARM. While the collapsed deal was a disappointment, it’s not the first or last time insurmountable regulatory hurdles have thrown a company’s plans through a loop. That thrusts NVIDIA’s core performance into the spotlight. Gaming has been enjoying a golden era and NVIDIA’s chips are right at the heart of it – its RTX 30 series has been described as revolutionary. But the power of NVIDIA [NASDAQ:NVDA] chips means they’re increasingly in demand outside the world of consoles and joysticks. All-in-all, it’s reasonable to expect a positive tone in next week’s results.

But outside the core business, it’s the Data Centres business which has been the real engine room of growth in recent times. Revenue in this division rose 55% in the third quarter, helped by sales to large cloud computing customers. We know from the recent spate of tech results that cloud computing is continuing its march upwards, so this may well have fed through to Data Centres’ results. It’s worth keeping in mind that as a company entrenched in the tech sector, the market will judge any missteps very harshly amidst the ongoing inflation concerns.”

Reckitt Benckiser, Full Year Results, Thursday 17 February

Laura Hoy, Equity Analyst Reckitt Benckiser [LON:RKT] management raised the bar after a strong third quarter, with an upgraded forecast for 1-3% revenue growth. More impressive was management’s assertion that despite ongoing inflation, margin forecasts remained intact for 22.7-23.2%. As consumers feel the pinch of a higher cost of living, we’re wondering where Reckitt’s products fall on the list of priorities. The group’s stable of well-known brands should serve it well, but some customers may be starting to slide down the value chain to lower-priced products as their budgets are stretched.

We’ll be looking for evidence that some of the pandemic-related surge in demand for Hygiene products like Lysol and Dettol stuck around this year, but a greater focus will be on Health. Heading into the winter over the counter medicines were up 20%, but now that we’re well and truly into cold and flu season we’d like to see that momentum continue.”

Natwest Group, Half Year Results, Friday 18 February

Sophie Lund-Yates, Equity Analyst “Interest rate hikes are bad news for most businesses, but not banks. Since they make money on what they can charge customers versus the rate they receive on deposits, the benefits will soon start to stack up. We’re therefore expecting a reasonably spritely tone from Natwest Group [LON:NWG].

Operating profits in the first nine months of the financial year were buoyed by the release of £949m, which had been put aside in case people defaulted on their loans during the worst of the pandemic. This time around, this helpful tailwind won’t be blowing as strongly so we’ll be keenly focussed on the underlying profit figure.

Finally, it will be the outlook statement we’re interested in. Rising inflation has tended to dent consumer confidence as household incomes don’t go as far. That could lead to a reduction in customers spending on credit, which then affects banks.”

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

14-Feb
No FTSE 350 Reporters
15-Feb
Glencore Full Year Results
16-Feb
Barrick Fourth Quarter Results
Heineken Full Year Results
Indivior Full Year Results
Nvidia Fourth Quarter Results
Primary Health Properties Full Year Results
17-Feb
AVEVA Third Quarter Trading Statement
Moneysupermarket Full Year Results
Nestle Full Year Results
Reckitt Benckiser Full Year Results
Safestore Holdings First Quarter Trading Statement
Standard Chartered Full Year Results
18-Feb
City of London Investment Trust Half Year Results
Natwest Group Half Year Results
SEGRO Full Year Results
TBC Bank Full Year Results

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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