George Salmon 14 September 2017
Tuesday brought the news that UK inflation increased to 2.9% in August. This helped the pound to a one year high against the dollar, paring recent gains for many of the UK’s companies with a global footprint. With attention turning back to the reporting calendar next week, we’ll be focused on;
- Ocado’s third quarter trading statement, where the group will be looking to follow up news of a breakthrough international licencing deal with a strong set of numbers.
- Half year results from Kingfisher, with progress on the ONE Kingfisher transformation due to take centre stage.
- Saga’s interim results. Insurance remains the dominant division, but we’ll be keeping an eye on the group’s plans to more effectively cross-sell its services.
FTSE 350 stocks reporting next week
|Dairy Crest||Half Year Trading Statement|
|Babcock International||Trading Update|
|Ocado*||Q3 Trading Statement|
|Kingfisher||Half Year Results|
|IG Group||Q1 Trading Statement|
|Kier Group||Full Year Results|
|Capita||Half Year Results|
|Saga*||Half Year Results|
|Smiths Group||Full Year Results|
*Hargreaves Lansdown provides research updates on these stocks
Up until this summer, there wasn’t too much happening at Ocado.
Yes, sales and customer numbers were heading strongly up, but investors were still waiting on an agreement for a third party to use Ocado’s technology.
That changed on 5 June. That was the day Ocado announced a ‘regional European retailer’ had signed on the dotted line, and will be paying an upfront fee to use Ocado’s patented technology, plus further payments depending on the success of its online operation.
Looking ahead to third quarter results, we expect to see the usual double digit percentage increases in order numbers, but the possibility of more deals is what is supporting the forward price to earnings ratio of 192.6. Any comment here will be read with interest.
Kingfisher was at pains to point out its second quarter was impacted by seasonal swings, but the declines were sufficient to ensure like-for-like sales at B&Q joined the French divisions Castorama and Brico Dépôt in negative territory.
This underwhelming Q2 update followed an unspectacular first quarter, meaning aggregate half year numbers are unlikely to bring much joy for investors this time.
While it would be nice to see Véronique Laury outline a more upbeat outlook, her update on the potentially transformative ONE Kingfisher plans is likely to carry greater weight.
The ambitious plans remain some way off completion, but given the targeted £500m per annum cost saving, the tone of the update on progress will be important. So far, the group has remained optimistic, despite elements of disruption creeping in.
An optimist would say that Saga is one of a select few companies out there so dominant in its field that its name has slipped into everyday vernacular. While Google has to settle for being a verb, Saga is aiming to become a way of life for its customers.
Unfortunately, this is where the pessimist’s view of the company comes in. To date, Saga hasn’t quite commanded the aspirational image it might have liked.
Nevertheless, with the baby-boomers hitting retirement, the number of potential customers fitting the affluent pensioner profile is increasing. In these results, we’ll be looking out for customer growth in the key insurance division, and also for signs the group is making headway with its plans to better cross-sell its numerous services.
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