Some of the local earnings releases to take note of this week include:

  • AVI (Full year earnings): In the July trading update, the company said that headline earnings per share are expected to increase by between 8% and 10% which was in-line with expectations (Bloomberg: +10.6%). Revenue increased 8.2%, mainly due to selling price increases necessitated to offset a weaker ZAR and rising raw material costs. Management said that all business units achieved profit growth with the operating profit margin expanding on y/y basis.
  • Master Drilling (Interim Results): Results for the full year were negatively impacted by declines in mining exploration and production activities as clients continued to opt for shorter term projects which impact cost efficiencies. Management expects the weaker utilisation rates of drilling rigs to continue in 1H17 but start improving in the later part of the year with an aim to drive rates to mid-70% and improve return on investments.
  • Grand Parade Investments (Full Year Results): In its interim results’ outlook statement, management said that the expansion of Burger King is expected to gain momentum with Dunkin Donuts and Baskin-Robbins expected to reach profitability in the near term. Our focus will be on whether solid performance by GPI Slots was maintained from 1H17.
  • Clover (Full Year Results): In a recent trading statement, the company said that HEPS are expected to fall by between 50% and 65%. The major contributors to lower earnings have been prolonged drought conditions and rand volatility that resulted in above inflation input costs which could not be recovered through revenue increases as consumer sentiment remains subdued. While Clover’s brands did not trade in line with volume expectations, the results were negatively impacted by a decrease in services rendered income.
  • Ascendis Health (Full Year Results): In the August trading statement, management stated that HEPS would increase by between 22% and 31% y/y, tracking behind expectations (Bloomberg: +56.63%). Despite the subdued trading environment, management is pleased with the resilient performance of its diversified business model.
  • Aspen (Full Year Results): Management guided for normalised HEPS to increase by between 13% and 18%, in-line with market expectations (Bloomberg: +15.8%). Basic HEPS are expected to rise by between 43% and 48%. The sharp increase in basic HEPS was influenced by the devaluation of Aspen’s Venezuelan business in the prior year.
  • Impala Platinum (Full Year Results): HEPS are expected to deteriorate to a loss of between 125 and 150 cents per share compared to earnings of 12 cents. This was worse than expected (Bloomberg consensus: -368.2% y/y). The company recorded a gross loss relative to a gross profit in FY16. In addition, the  income tax credit was negatively affected by both an increase in additional profits tax for Zimplats in the current year and a non-recurring tax credit on a bad debt in the prior comparable period.
  • Other notable earnings releases expected next week include RMI Holdings, Trellidoor and African Energy Partners.
  • Tuesday marks the last day to trade in ARB Holdings, Adcock Ingram, Arrowhead Properties, Discovery, Exxaro, Grindrod, Liberty Two Degrees, Massmart, Naspers, South 32, Standard Bank, Truworths and Woolworths to receive their most recently declared dividends. These counters will trade ex-dividend on Wednesday. Vukile Property, Richemont and Datatec will host AGMs next week, while Tsogo Sun will host its GM on Thursday.

Multinational computer technology corporation Oracle will likely create some buzz within the US tech sector this week as the group prepares to release first quarter results. Based on a report from Bloomberg Intelligence, Oracle is expected to achieve continued growth in its cloud infrastructure-as-a-service (IaaS) product. Sales growth in the group’s more mature cloud application and platform products should also be relatively upbeat as more customers adopt cloud-technology. Bloomberg is guiding for bottom-line growth of 9.9% y/y and top-line growth of 4.7% y/y for the quarter.

In Europe, the focus will likely be on the retail sector with footwear and home products retailer Next scheduled to release half year numbers. According to Bloomberg, earnings are expected to fall by 7.6% for the full year and by 13.3% for the half year period. Weakness in bottom-line growth can be attributed to fierce online competition as well as expanding store space despite diminishing sales densities.

In the Asia Pacific region, investors will likely keep a watchful eye on full year results from Myer – Australia’s largest full line department store group with more than 60 stores in prime retail locations. Bloomberg estimates are guiding for a fall in earnings of 6.9% with the margin expected to shrink to low single digits. According to Deutsche Bank, the Australian retailer’s plan for less discounting and more experimental retail hasn’t been as successful as anticipated given that competitors continue to discount aggressively, making it difficult to grow sales at healthy margins..

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