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Imperial Brands’s new strategy and easyJet’s cost savings in focus on Tuesday


Dividends will be a big focus for Imperial Brands PLC (LON:IMB) when it puts out its final results on what will be a fairly busy Tuesday for London’s business diary.

Last month, new boss chief executive Stefan Bomhard promised to “share some initial observations about the business” alongside this week’s full-year results before he lays out a more detailed strategic update early next year.

Imperial also revealed some headline numbers for the year to September 30, including that revenues were up around 1% in at constant currency rates but that earnings per share fell around 6%.

Bomhard, who joined the big tobacco group at the start of July after five year in charge of car dealership group Inchcape, is looking to stub out the embers of a remarkably bad year, which featured two profit warnings, a sudden change of chief executive, a dividend cut and a slump in the share price to their lowest in around 16 years.

One area that Bomhard will be looking at it is the poor performance of the group’s next-generation products (NGPs), including its Blu vaping range, Pulze heat-not-burn tobacco and Skruf snus.

Analysts at RBC Capital Markets have suggested another novel strategy, saying that if the company’s copious cash flow was used for bigger share buybacks the company could buy back its current market value within seven years.

Loss arriving from easyJet

With its shares having been given a major boost by the vaccine news this week and last, easyJet PLC (LON:EZJ) will release final results with a little more optimism than might have otherwise been the case.

The budget flier has already warned that the pandemic will lead it to descend to its first ever annual loss this week and has, like its rivals, also cut capacity for the coming winter.

Full-year revenues are expected to come in at around £3bn, with the company having warned that the underlying loss before tax will be between £815mln and £845mln, compared to the £427mln profit recorded a year ago, while it will also be throwing in exceptional items of £440mln from things like hedge ineffectiveness, restructuring and its sale and leaseback programme.

The company has provided no guidance for the next financial year other than that it expects to operate 25% of planned capacity during the first quarter.

Analysts at broker Peel Hunt said they anticipate that 28% of planned capacity will be operated in the first half and that this will shoot up to 85% in the second.

“One of the key details that we look for in the results will be more on the UK labour agreement, which has provided much greater flexibility, and whether negotiations have been successfully concluded in Germany, Portugal and Switzerland to achieve similar savings.

“These savings are critical to reduce cash burn further and improve efficiency to become more competitive in the future, especially if Wizz Air is able to increase the number of slots it has at Gatwick airport,” the analysts said.

Experian reports interims in shadow of GDPR troubles

Interim results are also due from consumer credit group Experian PLC (LON:EXPN), with data protection in focus after a ruling by the UK Information Commissioner’s Office found the company had breached GDPR rules in its UK marketing business, which could result in a hefty fine if not resolved.

While this issue highlights the risks of data handling, the company is continuing to expand its data mining operations into areas such as automotive and healthcare, although loan decisions remain its core business, which may become an issue during the economic downturn as banks become more reluctant to lend, dampening demand for the firm’s services.

However, the company is expecting to do better than previously expected, raising its full year outlook in September after a better second quarter. The outperformance was attributed to the US mortgage market which bodes well as it indicates the firm’s data services will become more important for decisions in the sector.

Meanwhile, costs will also be a key area of focus in the results, particularly with legal costs potentially eating away at the firm’s margins.

Analysts at UBS are forecasting first half revenues of US$2.55bn with earnings (EBITA) of US$652mln.

Significant announcements expected on Tuesday November 17:

Finals: easyJet PLC (LON:EZJ), Imperial Brands PLC (LON:IMB), Focusrite PLC (LON:TUNE), Genedrive PLC (LON:GDR), Petra Diamonds Ltd (LON:PDL)

Interims: Big Yellow Group PLC (LON:BYG), Experian PLC (LON:EXPN), Homeserve PLC (LON:HSV), Intermediate Capital Group PLC (LON:ICP), Telecom Plus PLC (LON:TEP), AdEPT Technology Group PLC (LON:ADT), Assura PLC (LON:AGR), Gear4music Holdings PLC (LON:G4M), Palace Capital Plc (LON:PCA), Redcentric PLC (LON:RCN), Scapa Group PLC (LON:SCPA), Schroder REIT Ltd (LON:SREI), System1 Group PLC (LON:SYS1),

Trading updates: Aggreko PLC (LON:AGK), Ocean Outdoor Limited (LON:OOUT), Nostrum Oil & Gas PLC (LON:NOG), Energean PLC (LON:ENOG)

Economic data: US retail sales, US production

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