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Next week on the stock market

What to expect from a selection of FTSE 100, FTSE 250 and selected overseas shares reporting next week.

Important notes

This article isn’t personal advice. If you’re not sure whether an investment is right for you please seek advice. If you choose to invest the value of your investment will rise and fall, so you could get back less than you put in.

Among FTSE 100, FTSE 250 and selected other companies scheduled to report next week:

  • Rolls-Royce should reassure us the full year cash outflow won’t be worse than expected
  • Provident Financial's outlook for the crisis hangs in the balance
  • WPP will tell us how it’s cost savings are going

FTSE 100, FTSE 250 and selected other stocks scheduled to report next week

Bunzl Half Year Results
Apax Global Half Year Results
James Fisher and Sons Half Year Results
Polymetal Half Year Results
Provident Financial Half Year Results
Diploma Q3 Trading Statement
Flutter Entertainment Half Year Results
Grafton Group Half Year Results
Hays Full Year Results
OneSavings Bank Half Year Results
Rolls-Royce* Half Year Results
WPP* Half Year Results
Essentra Half Year Results

*Companies on which we will be writing research.

Rolls Royce – Sophie Lund-Yates, Equity Analyst

A half year trading statement means we know a fair amount of what to expect next week. Most significant is that engine flying hours (EFH) were down 50% in the half thanks to global flight restrictions. That’s significant because EFH determines how many engine services are required, and service revenues are significant.

While it will be interesting to get an idea of exactly what this revenue reduction has meant for profits, that’s not the most important thing to focus on. Instead we’ll be looking closely at the outlook statement.

Rolls-Royce has predicted that the disruption will cause a £4bn cash outflow for the full year, and we’d like to make sure the cash exodus doesn’t spiral out of control. This will, in part, be a function of the recovery in EFH. The key Civil Aerospace division saw “marginal” improvements here in May and June, and we’d like to know how things have looked as summer’s progressed.

We’ve said before that dilutive equity raises or disposals can’t be ruled out given the challenges. Analysts don’t think this will be on the cards just yet, but investors should be prepared for the possibility, especially if the full year trajectory looks more challenging.

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Provident Financial, Nicholas Hyett, Equity Analyst

Provident Financial is a doorstep lender, but also makes online payday style loans through its subsidiary Satsuma, offers retail credit cards through Vanquis Bank, and provides vehicle finance through Moneybarn. All four businesses cater for non-standard customers – borrowers who would typically be denied a loan by high street banks.

On the one hand non-standard, unsecured, consumer debt is generally not a great place to be in financial downturn. As people lose their jobs the number of defaults increase and because the loans are unsecured Provident will struggle to get its money back.

On the other hand, people are more likely to need the emergency bridging loans of the type Provident specialise in at time of financial distress. That could see the group grow its loan book. As a large and established name, which has weathered many downturns in its 140 year history, it’s more likely to survive than smaller companies, potentially improving the competitive environment.

How these two competing forces play out at half year results will be worth watching.

See the latest Provident Financial share price, charts and how to trade

WPP – Sophie Lund-Yates, Equity Analyst

Advertising budgets are often amongst the first costs to be cut when economic conditions sour, so we’re expecting WPP to have had a difficult time over the last few months. The most significant spending cuts in the first quarter came in the Automotive, Travel & Leisure and Luxury & Premium sectors. However, the more important Consumer Packaged Goods, Technology and Healthcare & Pharma sectors had been more resilient. We’ll get brought up to speed regarding any more recent developments next week.

WPP has responded to the pandemic by focussing on controlling costs. The current range of measures includes hiring freezes, stopping discretionary spending and salary reductions for senior management. The plan was to save £700m to £800m in this way, and we look forward to finding out how successful it’s been.

We’re also wondering whether management will provide any full year guidance. We’re further into the crisis than we were when the group last reported, and the nature of advertising means WPP will be speaking to many other businesses about their plans. This may give the group more confidence in its forecasts one way or the other.

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Unless otherwise stated estimates are a consensus of analyst forecasts provided by Thomson Reuters. These estimates are not a reliable indicator of future performance. Past performance is not a guide to the future. Investments and income they produce can rise and fall in value so investors could make a loss.

This article is not advice or a recommendation to buy, sell or hold any investment. No view is given on the present or future value or price of any investment, and investors should form their own view on any proposed investment. This article has not been prepared in accordance with legal requirements designed to promote the independence of investment research and is considered a marketing communication. Non-independent research is not subject to FCA rules prohibiting dealing ahead of research, however HL has put controls in place (including dealing restrictions, physical and information barriers) to manage potential conflicts of interest presented by such dealing. Please see our full non-independent research disclosure for more information.

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    Important notes

    This article isn’t personal advice. If you’re not sure whether an investment is right for you please seek advice. If you choose to invest the value of your investment will rise and fall, so you could get back less than you put in.

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