Among others, the following local companies are set to report results this coming week:
- Mpact (Interim Results): Management guided for headline earnings to fall by between 55% and 74% y/y, which was significantly behind full year market expectations (Bloomberg: -5.7%). Results were negatively impacted by lower sales volumes in the Paper and Plastics converting businesses. In addition, scheduled downtime of the R765 million Felixton paper mill upgrade project will result in non-recurring additional costs and lost contribution.
- Glencore (Interim Results): In its half year production report, production disappointed and guidance for FY17 was altered downwards for coal (-2%), copper (-2%), nickel (-4%), zinc (-7%) and ferrochrome (-4%). Following the sale of 50% of Glencore Agri, this business and segment is now fully reported as marketing, with EBIT guidance for the division increasing to between $2.4 billion and $2.7 billion (previously $2.3 billion to $2.6 billion).
- Old Mutual PLC (Interim Results): While Bloomberg consensus is looking for a 14.6% increase in headline earnings for the full year, our main focus will be on the progress of the group’s managed separation programme. The group announced in February 2016 that it was working towards separating itself into four standalone businesses. We will also focus on the impact of the ZAR/GBP exchange rate on translation for the Wealth segment, with the pound sterling having depreciated against the rand over the period.
- Property counters NEPI Rockcastle and Fortress Income Fund will release interim and full year results, respectively next week.
- Monday marks the last day to trade in Anglo American PLC to receive its most recently declared dividend. The counter will trade ex-dividend on Tuesday. Investec PLC, Tradehold and the Spear REIT will host AGMs next week.
Earnings season in the US will continue to taper off next week however a few luxury brands are likely to create some buzz at the beginning of the week. Michael Kors and Ralph Lauren are scheduled to release first quarter results on Tuesday with Bloomberg expectations guiding for a fall in bottom-line growth of 30% y/y and 11% y/y, respectively. US retail sales unexpectedly fell in June for a second consecutive month (-0.2% m/m) compared to expectations for a 0.1% gain – the reading was weighed on by lower sales at clothing stores, supermarkets and service stations. American energy drink company Monster and Beverage and diversified multinational mass media and entertainment conglomerate Walt Disney are also scheduled to release quarterly earnings early in the week followed by a number of retail counters including Macy’s and Kohl’s. According to JP Morgan’s Q2 Earnings Season Tracker, 78% of S&P500 companies have reported EPS numbers ahead of estimates, surprising positively by an average of 5%. Looking at the overall market, second quarter EPS growth has come in at 7% y/y so far with all sectors delivering positive growth thus far. Revenue is up by 4% y/y so far with 72% of the counters beating sales estimates.
Whilst European markets are also expected to be relatively quiet this week, several financial counters are set to release half year results including Prudential and Zurich Insurance. Based on Bloomberg estimates, adjusted earnings are expected to grow by 6.5% y/y and 17.2% y/y for the full year. Investors will also keep a watchful eye on results from the world’s second-largest Coca-Cola anchor bottler Coca-Cola HBC. Bloomberg Intelligence stated that the bottler has been benefiting from improving economic conditions in many of its markets which enabled the group to raise prices across the portfolio. The group is likely to report constant currency revenue growth ahead of expectations (~4.5%) if volumes continue to improve as the year progresses.
In the Asia Pacific region, the focus will likely be on second quarter results from Chinese state-owned telecommunication company China Mobile. Bloomberg consensus is guiding for earnings growth of 6.2% y/y and for revenue to increase by 4.8% y/y for FY17. Macquarie expects revenue to grow ahead of Bloomberg estimates (~6% y/y) on the back of solid 4G and fixed-line broadband subscriber growth – 1H17 4G subscribers grew by 10 million to 594 million and fixed-line broadband subscribers rose by 3 million to 93 million in June.
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