Look ahead to FTSE 350, other companies reporting & economic events from 11 to 15 April
- GDP figures will give the UK economy another temperature check
- easyJet plc (LON:EZJ) 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 (BIT:LVMH) with some recovery offset by Chinese lockdowns
- All eyes will be on how Pennon Group plc (LON:PNN) will play catch up to inflation
- Is the worst still yet to come with he last CPI reading before Awful April’s price rises kick in
- Tesco PLC (LON:TSCO) looks to build on a strong Christmas period and deliver profits at the top end of previous guidance
Q4 2021 hedge fund letters, conferences and more
February GDP, ONS, Monday 11 April
Susannah Streeter, Senior Investment and Markets Analyst
“The UK economy will have another temperature check, amid the deepening cost of living crisis and investors will be assessing just how quickly it could tip into a downturn. The snapshot for January included the bounce back from the dampening effects of Omicron, with hospitality helping drive the recovery, with growth up 0.8% compared to December’s 0.2% contraction. But what’s also helped the economy return to above pre-pandemic levels is activity in the healthcare sector with GP visits and vaccine programmes boosting overall output. We really need to see a shift upwards in overall productivity levels for longer term resilience, but in the shorter term it’s the appetite for spending which will be the driver of growth given how reliant the economy is on consumption. However, with horribly high energy bills, interest rate rises, and the price of essential goods set to soar even higher, the worry is that spending could fall off a cliff, particularly among mid and low-income households. The writing is on the wall, with warnings of the biggest drop of living standards on record as wages fail to keep pace with rising prices.
So, any hint of a slowdown in consumer facing sectors may herald the start of a bleaker time ahead for the UK economy. The February reading also won’t include much of the commodity chaos unleashed by the invasion of Ukraine, so any sign of ongoing resilience may well be short-lived. Worries are rising that the UK could tip into a recession this year, but with a chunk of lockdown savings yet to be spent, more fortunate consumers may still have the urge to keep splashing the cash - helping to stave off a downturn - until new sky-high energy bills land in the Autumn.”
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.”
CPI Inflation, ONS, Wednesday 13 April
Susannah Streeter, Senior Investment and Markets Analyst
“Prices were already feeling hot hot hot in February, but March’s reading is set to send the mercury soaring again. The spike in commodity costs which hit soon after the invasion of Ukraine ricocheted through to consumer prices, with fuel in particular jumping as an immediate result. Prices at the pumps and for second-hand cars were among the big drivers of February’s increase to 6.2%. There was a fresh sense of foreboding on forecourts as a barrel of Brent jumped to $139 a week into March, and prices trickled through to fuel retailers. So, another sharp intake of breath is expected when the latest inflation reading comes through, but the worry is the worst is yet to come. This snapshot is being taken before awful April’s price rises kick in, with energy costs jumping again for millions of people. There is no quick fix from the Bank of England available to rein in prices, given that a sharp increase in interest rates will only add to the cost-of-living squeeze with council tax, vehicle duty and other utility bills also rising this month for millions of people. Worries about stagflation, stubbornly high prices but sluggish growth, settling over the economy are why the Bank has so far shied away from illuminating just how steep the rate hike path may be. It still seems intent on taking a cautious approach to tighter monetary policy, fearful of tripping up the economy and pushing it into reverse, but that may change if there is another round of scorching high inflation, which risks becoming embedded in the economy.”
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.”
11-Apr
No Reporters
12-Apr
| LVMH* | Q1 Trading Statement |
| ASOS* | Half Year Results |
| easyJet* | Half Year Trading Statement |
| Liontrust Asset Management | Q4 Trading Statement |
| Moneysupermarket.Com Group | Q1 Trading Statement |
| Pennon Group* | Trading Statement |
13-Apr
| Tesco* | Full Year Results |
| PageGroup | Q1 Trading Statement |
14-Apr
| Hays | Q3 Trading statement |
| Ashmore Group* | Q3 Trading statement |
| Dunelm Group | Q3 Trading statement |
| Mediclinic International | Q4 Trading Statement |
| Ninety One | Asset Under Management Statement |
15-Apr
No Reporters
*Events on which we will be updating investors
One of HL's non-executive directors is also a non-executive director at easyJet.
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