Topps Tiles, IAG, easyJet, Electrocomponents and US jobs in focus after Easter break

By Renae Dyer / March 29, 2018 / www.proactiveinvestors.co.uk / Article Link

The week after the Easter break looks set to be quiet on the corporate earnings front with only a handful of trading statements.

Given the recent woes in the retail sector, investors are likely to keep an eye on interims from Topps Tiles Plc (LON:TPT) after a challenging 2017 saw its profits and sales drop.

The previous week saw another retailer in the dumps with Conviviality PLC (LON:CVR) -  the owner of Bargain Booze and Wine Rack - saying it plans to file for administration in the next two weeks.  

READ: Bargain Booze owner Conviviality to file for administration after failed cash call

The news came in the wake of the collapse of Toys R Us UK and Maplin.

In the airline sector, easyJet PLC (LON:EZJ) and British Airways owner International Consolidated Airlines Group PLC (LON:IAG) are expected to report an increase in passenger numbers for the Easter period.

Meanwhile, investors will be hoping a trading update from Electrocomponents Plc (LON:ECM) reveals the electronics company has been able to keep up the momentum after a recent strong performance.

Away from company news, market participants will be turning their attention to the latest US non-farm payrolls report to gauge the health of the jobs market.

Topps Tiles continues to take 'prudent view' of market conditions

Following a tough 2017, Topps Tiles managed to turn it around in the first quarter.

In a January trading update, the UK tiles retailer reported a 3.4% jump in like-for-like revenues in the 13 weeks to the end of December.

Topps said the sharp rise in revenue was brought about by its ability to maintain "market leading margins", further investment in its service offering and a "strong outperformance" from the UK tile market as a whole.

But the group remained cautious, saying: "While we are pleased with the like-for-like sales growth achieved in first quarter, we are retaining our prudent view of market conditions for the year ahead."

The UK retail market has been hit by higher inflation, an uncertain economic outlook and a slowdown in consumer spending.

After a series of profit warnings leading up to its 2017 results in November, Topps posted a 2.9% drop in like-for-like revenue to ?211mln and a 15% decrease in pre-tax profit to ?17mln.

Easter boost for Easyjet and IAG

Both Easyjet and IAG could are likely to benefit for a last-minute bump in passenger stats for March, due out on Thursday, thanks to the squeezing in of Easter at the end of the month (it was mid-April last year).

Investors in Easyjet will be hoping for more of the same, after seeing improved month-on-month numbers in February - nonetheless, the beastly weather disruptions are likely to have had an impact given that key departure hubs in the UK were hampered significantly during the unseasonal near blizzard conditions.

Last month, the orange budget airline reported a 4% increase in passenger numbers in February, to 5.5 million. The load factor, a measure of passengers against the number of seats available, rose 1 percentage points (pts) to 93%. On a rolling 12-month basis, passenger numbers rose 9.2% to 82.2 million and the load factor increased 1.6pts to 93.2%.

Given its broader operating sphere, BA-owner IAG could be proportionately less impacted by the adverse conditions. The marker for IAG to beat was set in February as 5.8% growth, year-on-year, at just over 7mln passengers carried.

Electrocomponents set to report revenue growth

Expectations may have risen ahead of Electrocomponents' next trading update, due Thursday, as stockbroker Hargreaves Lansdown analyst Laith Khalaf highlighted the recent strong trading after a few stagnant years for the business.

"Comparatives are getting tougher, but it'd be good to see this momentum continue into the Spring," the analyst said in a note.

"It's not just the top line where improvements are being realised. Customer satisfaction is growing, and with cost savings in the pipeline, analysts are hoping operating margins can rise.

He added: "We may need to wait until full year results in May, but since the group has geared investors to expect further efficiency measures, we'll be keeping an eye out for any early word of more earning-enhancing plans."

Elsewhere, Liberum Securities expects to see full year underlying revenue growth of 13.6% for the 2018 financial year, with all regions expected to deliver double-digit percentage growth.

Liberum analyst Rahim Karim forecasts improved margins and dividend growth.

"The electronics market also appears to be extremely strong with a number of companies including Avnet and Arrow Electronics talking to a positive global outlook," Karim said.

"With this back drop, and acknowledging the tough comps that FY18 present, it would appear that our current underlying revenue growth forecast of 4.6% in FY19 looks conservative. At this stage we leave these assumptions unchanged but anticipate the company talking to the market outlook in more detail with its FY18 results in May."

Fed eyes US non-farms report

A strong labour market prompted the Federal Reserve to raise interest rates in March so the central bank is likely to be closely monitoring the next official jobs data.

Economists expect the US non-farm payrolls report on Friday to show employers added 185,000 jobs in March after a better-than-forecast 313,000 in February.

The unemployment rate is anticipated to fall to 4.0% from 4.1% while average hourly earnings growth is projected to accelerate to 2.7% year-on-year from 2.6%.

 

Significant events expected:

 

Monday April 2:

EASTER MONDAY

 

Tuesday April 3:

Trading update: BTG PLC (LON:BTG), Renew Holdings PLC (LON:RNWH)

Finals: Akers Biosciences Inc (LON:AKR) (NASDAQ:AKER), Menhaden capital PLC (LON:MHN)

Economic data: BRC shop price index; UK manufacturing PMI survey; US ISM manufacturing index; US construction spending

 

Wednesday April 4:

Trading update: Topps Tiles (LON:TPT), Renewi PLC (LON:RWI)

Finals: Concurrent Technologies PLC (LON:CNC), Maxcyte PLC (LON:MXCT), Next Fifteen Communications PLC (LON:NFC)

Traffic numbers: Wizz Air PLC (LON:WIZZ)

Economic data: UK construction PMI survey; US ADP employment report; US factory orders; US ISM non-manufacturing index

 

Thursday April 5:

Trading update: Electrocomponents PLC (LON:ECM), Homeserve PLC (LON:HSV)

Traffic numbers: easyJet PLC (LON:EZJ), International Airlines Group PLC (LON:IAG)

Finals: Walker Greenbank plc (LON:WGB)

FTSE 100 ex-dividends: Aviva PLC (LON:AV.), ConvaTec Group PLC (LON:CTEC), Direct Line Insurance Group PLC (LON:DLG), GKN PLC (LON:GKN), Old Mutual PLC (LON:OML), Pearson plc (LON:PSON), Smith & Nephew PLC (LON:SN.), St James's Place PLC (LON:STJ), Travis Perkins PLC (LON:TPK), Taylor Wimpey PLC (LON:WT.)  

Economic data: UK services PMI survey; US weekly jobless claims; US Challenger job cuts report; US international trade numbers

 

Friday April 6:

AGM: XP Power Ltd (LON:XPP)

Economic data: US non-farm payrolls report; US consumer credit numbers

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