Tesco PLC and Royal Mail PLC among big guns reporting in coming week

The coming week will see updates and results from a handful of well-known firms, notably FTSE 100-lited supermarket giant Tesco PLC (LON:TSCO) and  FTSE 250-listed Royal Mail PLC (LON:RMG).

There will also be some macro news to keep investors occupied in the form of June ‘flash’ PMI figures for both the UK and the US, as well as the latest US weekly jobless claims.

Tesco counts receipts from coronavirus quarter

Tesco will close out the week with a trading update. The grocer’s strategy has helped to restore investor confidence in the firm, and its size and buying power had also been well received by shareholders.

In the current climate the company’s shares have also taken on a defensive quality, so stability is likely to be high on the agenda as well as the economy emerges from lockdown.

Meanwhile, investors are likely to look for any news on how Tesco is aiming to stave off the ongoing competition for its market share, particularly from discounters Aldi and Lidl, however with the ongoing coronavirus pandemic uncertainty any concrete guidance is unlikely.

There may also be some news on the company’s planned £8bn sale of its Thai and Malaysian businesses, such as how much of the proceeds the firm intends to return to investors in the form of a special dividend.

Analysts at Shore Capital are expecting like-for-like (LFL) retail sales growth of 4.8% for the period, with 9% LFL growth in the UK division. The broker is predicting “very strong grocery retail sales” alongside weak catering activity and poor general merchandising sales.

Royal Mail braced as its posts full year figures

Thursday will see full-year results from Royal Mail, which follow shortly after the abrupt departure in May of its chief executive Rico Back.

With Back’s departure, interim CEO Keith Williams is left in a difficult situation, the mail carrier’s shares are currently at around half of their listing price when it was floated in 2013 after being returned from state ownership, the dividend has been cut and it has delivered a string of profit warnings. In short, there may be little for investors to look forward to.

A trading update in May did little to alleviate the gloom as the company reported a 33% fall in letter volumes and a £40mln increase in costs in the five weeks to May 3, 2020, although parcel volumes did jump 31% as more people ordered goods online during the coronavirus lockdown.

With this in mind, shareholders are likely to want news on the company’s turnaround plans, as well as how it aims to respond to the effects of coronavirus and social distancing measures on its operations.

There could also be some positive news as lockdown measures begin to be eased, with the company’s international parcels business GLS possibly seeing some volatility subside as nations begin to relax border controls.

Looming over all these issues is the threat of industrial action, with members of the Union of Communication Workers (UCW) having voted overwhelmingly to strike in March, although this was delayed as a result of the pandemic.

Auto Trader restarts the engines

Also on Thursday Auto Trader PLC (LON) will release its full-year results, the first with new chief executive Nathan Coe at the wheel after he stepped up from chief financial officer in March when Trevor Mather retired.

The FTSE 100-listed group offered free advertising packages to retailers in April and May and a 25% discount in June, saying last month that its marketplace data and consumer research suggested “healthy levels of demand” for second-hand cars.

This week, research by the AA indicated online searches for second-hand cars have rebounded higher than levels in the weeks preceding the coronavirus lockdown.

Price, stock levels and new product offers are the three key drivers of Auto Trader’s revenues and will be analysed closely for the year just ended and the year just begun, according to Russ Mould at AJ Bell.

Analysts are on average forecasting a 5% increase in sales to £372mln, with profit before tax rising 5% to £242mln.

UBS forecasts a large negative impact on stock and for the weakness in Manufacturing and Agency revenue seen in the first half to “accelerate to the downside”, but that Coe will deliver positive commentary on trading in the new financial year.

Crest Nicholson gets back to work

Housebuilder Crest Nicholson Holdings PLC (LON:CRST) will deliver interims on Wednesday, with its figures likely to provide more clarity on how the industry has coped with the UK’s coronavirus lockdown as well as the outlook for the housing market and construction industry in the year ahead.

Analysts at UBS are expecting a 14.5% decline in revenues year-on-year to £398mln on the back of 1,068 housing completions, a 10% fall from last year.

The bank said the full year outlook will be key, particularly the trend for new orders and cancellations, as well as completions from May 18 when building sites began to reopen.

Marston’s serves up update

Marston’s PLC (LON:MARS) will serve up an update on its progress in the first half on Friday, with the pub industry having been hit hard since the onset of the coronavirus pandemic.

The shares recovered some losses last month when the brewer and pub company agreed to spin off its brewery business into a joint venture with Danish giant Carlsberg, of which the Wolverhampton-headquartered outfit will own 40% and receive a £273mln cash payment.

FTSE 250-listed Marston’s said it will use the cash to pay down its debt, which stood at £1.4bn at the end of its September financial year and which the company has been aiming to reduce significantly by 2023.

With the shares still at half the level they started the year, investors will only be able to take solace from the brewing performance and wait until the government confirms when pubs can reopen.

Macro matters

The week’s main macro focus will be various preliminary ‘flash’ purchasing managers’ index surveys on the performance so far in June of the manufacturing and services sectors from most major economies around the world.

UK and US PMI data for both sectors is out on Tuesday.

“Although usually the manufacturing PMIs are the more important, nowadays it’s the service sector that’s under pressure and so everyone is waiting to see how the service sector recovers,” said analyst Marshall Gittler at BD Swiss.

“My impression from looking at the so-called ‘forecasts’ is that no one has a clue, really. The idea that Germany, the Eurozone as a whole and the UK should all have the same figure is fairly unrealistic,” he added.

“After all, it appears that Germany has emerged out of the lockdown much more than the UK, certainly, at least judging by the number of restaurant bookings and requests for directions.”

The other UK data will include the CBI’s surveys on the manufacturing and retail sectors on Monday and Thursday respectively.

Elsewhere, the week begins with a policy decision from China’s central bank and US data includes the GDP reading on Thursday, along with weekly jobless claims, durable goods orders, personal income and spending and the personal consumption expenditure (PCE) deflator measure of inflation.

Significant announcements expected for week ending June 26:

Monday June 22: 

Finals: Polar Capital Holdings PLC (LON:POLR),

Tuesday June 23:

Trading updates: St James’s Place PLC (LON:STJ), NCC Group PLC (LON:NCC)

Finals: Cranswick PLC (LON:CWK), Gear4Music Holdings PLC (LON:G4M), Naked Wines PLC (LON:WINE), Scapa Group PLC (LON:SCPA), Trackwise Designs PLC (LON:TWD)

Interims: Tricorn Group PLC (LON:TCN), Velocity Composites PLC (LON:VEL)

Economic data: UK final manufacturing PMI, UK final services PMI, US final services PMI, US final manufacturing PMI

Wednesday June 24:

Trading updates: Petrofac Ltd (LON:PFC)

Finals: Stagecoach Group PLC (LON:SGC), Premier Foods PLC (LON:PFD), Alpha Financial Markets Consulting PLC (LON:AFM), DiscoverIE Group PLC (LON:DSCV), HarbourVest Global Private Equity Ltd (LON:HVPE), Iomart Group PLC (LON:IOM), Savannah Energy PLC (LON:SAVE), ULS Technology PLC (LON:ULS)

Interims: Crest Nicholson Holdings PLC (LON:CRST)

Thursday June 25:

Finals: Royal Mail Group PLC (LON:RMG), Auto Trader Group PLC (LON:AUTO), Dixons Carphone PLC (LON:DC.), Mitie Group PLC (LON:MTO), Redcentric PLC (LON:RCN), XPS Pensions Group PLC (LON:XPS)

FTSE 100 ex-dividends to knock 1.68 points off the index: Experian PLC (LON:EXPN), United Utilities Group PLC (LON:UU.)

Economic data: US GDP, US weekly jobless claims

Friday June 26:

Trading update: Tesco PLC (LON:TSCO)

Interims: Marston’s PLC (LON:MARS)