Week ahead: Kingfisher, Pennon, Fevertree and Ocado
In a quiet week for economic announcements, London markets are expecting updates from Kingfisher, Fevertree, Ocado and Carnival.
Kingfisher
Kingfisher, which owns B&Q, has been battered by cost-of-living headwinds and a turbulent housing market. The firm cut its full-year pre-tax profit forecast to £560m in November as it forecast tough conditions through the winter.
Investors will be looking for an increase in the retailer’s e-commerce activity, which has been seen as a “potential saviour” for sales going forward, according to Hargreaves Lansdown’s Susannah Streeter.
She added: “With interest rates eyed on the horizon, UK house prices stabilising, and buyers and sellers gaining confidence, there’s hope that demand for home makeovers and renovations will rise.”
“But, although around three-quarters of earnings are driven by the UK, Kingfisher also needs to see improvements in other markets, like France, where the economic climate hasn’t been clement, and rivals like Leroy Merlin are proving tougher competitors.’’
Pennon Group
Pennon Group’s recent £89m acquisition of Sutton and East Surrey Water will be top of the agenda as it delivers a trading update on Monday.
The deal is still subject to approval by the UK Competition and Markets Authority (CMA), so investors are looking for any insight into how it’s moving forward, alongside an indication of performance ahead of the full-year results in May.
“The £89m price tag looks attractive and helps Pennon increase its foothold across Southern England by bringing more than 750,000 paying customers into the fold,” Aarin Chiekrie, equity analyst at Hargreaves Lansdown, said.
He added: “The deal’s been financed by cash on hand, but because of SES Water’s high levels of debt, Pennon went out and raised £180m of cash by issuing new equity shares. This will help to keep total debt levels within the group’s target range, while still providing room for its £2.8bn investment plans over the second half of this decade.”
Ocado
Ocado has been involved in a public spat over payments with its half-owner M&S. Nothing as yet has changed about the relationship so investors are looking for business as usual in Tuesday’s trading update.
“Last year, the division saw revenue rise 7 per cent, as higher prices offset a reduction in the number of items being bought. With grocery inflation tempering, investors will be interested to see how performance has developed,” Sophie Lund-Yates, lead equity analyst at Hargreaves Lansdown, said.
“There will also be a keen eye on active customer numbers. These were up almost 6 per cent last year and are an important barometer for future demand.”
Away from the FTSE 100, two other closely watched results will come from Fevertree Drinks and the FTSE-250 listed cruise operator Carnival.
Fevertree has struggled recently, with full-year revenue expected to come in below expectations. The company has flagged difficult trading in Europe, so investors will be focusing on whether its US segment can provide a tonic.
Carnival is hoping strong booking momentum in the final quarter of last year will continue into 2024. The three months to February are typically the quietest period of the year, but investors will get some insight into forward bookings.