UK companies reporting include leisure pair Ladbrokes Coral and Restaurant Group, while there is a fairly busy schedule of overseas macro data, including eurozone CPI and the Federal Reserve’s preferred measure of US inflation.
Chinese non-manufacturing purchasing manager’ index data kicks things off, with German retail sales at 0700 BST and unemployment figures at 0900 BST, followed by eurozone consumer price inflation and unemployment at 1000.
The euro area inflation print will be the last before the European Central Bank’s much anticipated meeting on 7 September, with the consensus forecast pointing towards CPI rising to 1.4% in July from 1.3% the month before, while core inflation is predicted to slip back to 1.2% from 1.3% previously.
“Euro area fuel prices rose this month which should provide some support to the headline inflation rate though that effect is likely to be cancelled out as the holiday related factors that had the largest impact on the annual rate in July — accommodation, package holidays and air fares — fade,” said economists at HSBC, differing from the consensus by expecting the net effect to leave inflation unchanged at 1.3%.
Later in the day currency traders will be watching a bundle of US data, including initial jobless claims, continuing claims, personal income and personal spending and the PCE core/deflator data, which is the Fed’s preferred measure of inflation.
The market expects income to rise 0.3%, nominal spending 0.4%, and with a 0.1% increase in the core PCE deflator should mean that real spending rose a decent 0.3%.
On an annual basis expectations are that the headline has remained steady at 1.4%, but that the core measure will fall back to 1.4% from 1.5%.
UK CORPORATE NEWS
Typically, being Thursday a host of stocks are going ex-dividend and will put a dent in the FTSE 350, with this week’s cabal including Ascential, Centamin, esure, G4S, Hammerson, National Express and St James’s Place.
Top-line results from Ladbrokes Coral are already known after a pre-close trading update at the end of July, with a 6% decline in UK retail net revenue, a 1% decline in European retail, and total group net revenue growth up 1% thanks to 17% digital net revenue growth. EBIT guidance for the half has been given as £153-158m.
The focus will therefore be on current trading, although it will be up against the Euro 2016 football championships which finished on 12 July last year.
UBS forecast total revenues of £1.2bn and total group operating profit of £157m, including £15m from synergies delivered in the half from the merger, and adjusted earnings per share of 5.6p.
“Within the divisions, we forecast operating profit as follows: UK Retail £113m, European Retail £9m, Online £29m, £3m in ‘Other’ and £15m of central costs,” analysts forecast, also predicting significant exceptional costs during the period relating to the costs of delivering synergies.
Broker Hargreaves Lansdown noted that there is potential for “a very large upset coming down the road” in the shape of the government’s triennial review of the gambling sector later this year, which is expected to include new stake limits for fixed-odd betting terminals (FOBTs).
“Sometimes described as the ‘crack cocaine of gambling’, these machines accounted for 56% of Ladbrokes Coral’s net revenue on UK high streets last year. Increased regulation would not do the sector, or LCL, any favours,” HL said.
Elsewhere, Restaurant Group‘s upsets are already apparent, with investors having had extra servings of profit warnings in recent years.
The Frankie & Benny’s and Garfunkel’s owner will serve up half-time numbers having updated the market for the first 20 weeks of the year, when like-for-like sales down 1.8%, which was a material improvement from the fourth quarter of last year when they fell 5.9%.
The latest Coffer Peach tracker shows that LFL growth in the casual dining market remains weak, with +0.6% growth in June and July.
Furthermore, with around half the company’s restaurants located as part of cinema and retail complexes, the first quarter was helped by a good film slate, which did not continue into the early summer. House broker Numis said the record June weather would also have contributed to the been “unfavourable” later conditions and meaning it “seems reasonable to expect a small, temporary moderation in footfall” for the subsequent six weeks, leading it to forecast LFL sales down 2.5% for the half as a whole.
With the pub business likely to have been helped by weather conditions and travel concessions also, Numis pencilled in PBT of £25.4m and EPS of 9.9p in what is a transitional year, with new CEO Andy McCue only unveiling his strategic findings in March and rolling out new menus completed at the start of May.
“We therefore expect the market’s focus to be on the customer response to new menus, execution of the cost savings plan and exiting closed properties.”
UBS remained cautious given pricing action to date at the largest brand Frankie & Benny’s still puts them at premium to other value offerings in the market. The Swiss bank is forecasting half-year revenues of £334 and full year LFL sales down 5%.
HAYS AND MELROSE
Recruiter Hays is reporting full year results having recently reported fourth-quarter trends where LFL net fees were up 7% and full year operating profit was expected to be marginally ahead of market expectations of circa £209.5m.
There was £110m of year-end cash and £60m of excess cash, of which a full payout would equate to 4p per share and a FY dividend of roughly 7p, implying a yield of around 4.5%.
Broker Numis said the market consensus is likely to have risen by circa £2m and believes the key factors for scrutiny at the FY results are the extent of the cash return and the outlook statement.
“Management has indicated its intention to return excess cash above a buffer of £50m to shareholders via a special dividend.”
Melrose Industries issued a very brief trading update for the first quarter that suggested interim results will be in line with expectations for the acquisitive group, with diversified Nortek continuing to improve performance while the power market remains difficult for generators business Brush.
Management said that the process of seeking the next acquisition had begun and that it was confident in finding a suitable opportunity before long.
Investors focus is likely to be on progress on margin enhancement at Nortek and any update on the timeline of the next acquisitions, said UBS, forecasting revenues of £1.08bn and hopes for EBITA of £138m at a 12.8% margin for the half as Nortek improves on 13.4% in the second half last year, unless seasonal trading patterns interfere.
Thursday August 31
INTERNATIONAL ECONOMIC ANNOUNCEMENTS
Chicago PMI (US) (14:45)
Continuing Claims (US) (13:30)
Initial Jobless Claims (US) (13:30)
Pending Homes Sales (US) (15:00)
Personal Consumption Expenditures (US) (13:30)
Personal Income (US) (13:30)
Personal Spending (US) (13:30)
Unemployment Rate (EU) (10:00)
UK ECONOMIC ANNOUNCEMENTS
GFK Consumer Confidence (00:01)
Alfa Financial Software Holdings , Arrow Global Group, BBGI SICAV S.A. (DI), Chesnara, Churchill China, Eddie Stobart Logistics, Exova Group, Grafton Group Units, Jimmy Choo, Ladbrokes Coral Group, Restaurant Group, Satellite Solutions Worldwide Group, STV Group, Total Produce
Alfa Financial Software Holdings
SPECIAL DIVIDEND PAYMENT DATE
Income & Growth VCT
SPECIAL EX-DIVIDEND DATE
Cambian Group, esure Group
Andalas Energy and Power, Globalworth Real Estate Investments Limited
FIH Group , Highlands Natural Resources, IG Design Group, Oryx International Growth Fund Ltd., Simian Global, Victoria
FINAL EX-DIVIDEND DATE
Accrol Group Holdings, Auto Trader Group , Circle Property , Downing Four VCT DP67 , Downing Four VCT DSO ‘D’ Shs, FIH Group , First Property Group, NCC Group, Solid State, Stagecoach Group, Walker Crips Group, Xafinity
INTERIM DIVIDEND PAYMENT DATE
Impact Healthcare Reit , International Biotech Trust, Polar Capital Global Financials Trust
INTERIM EX-DIVIDEND DATE
Aberdeen Emerging Markets Investment Company, Arbuthnot Banking Group, Ascential, British Smaller Companies VCT 2, Centamin (DI), Chemring Group, Croda International, esure Group, Foxtons Group , G4S, Global Ports Holding, Globaldata, Hammerson, Hochschild Mining, Hostelworld Group , Impellam Group, JPMorgan American Inv Trust, Juridica Investments Ltd., Kingspan Group, LPA Group, Mincon Group , National Express Group, Northern Electricity Prf, Rights & Issues Inv Trust Income Shares, Robert Walters, Robinson, Secure Trust Bank, St James’s Place, Stock Spirits Group , Ultra Electronics Holdings, Wood Group (John)
QUARTERLY PAYMENT DATE
City of London Inv Trust, Custodian Reit , Picton Property Income Ltd
QUARTERLY EX-DIVIDEND DATE
Aberdeen Diversified Income and Growth Trust , Alpha Real Trust Ltd., Premier Energy & Water Trust, Real Estate Credit Investments Ltd