The shares have halved over the past 12 months following two profit warnings, issued in December and July, as a result of substantial investments in IT and logistics, operational issues at warehouses and unfavourable market conditions.
It’s may not necessarily be a saving grace for Asos, which has already reported on trading for the 10 months up to 30 June, but it’s August year end means these numbers avoid the warm weather in September, which was the worst month on record according to the British Retail Consortium.
Analysts at UBS forecast underlying profits at £53.7mln, against Reuters’ consensus of £62mln on revenues up 12% to £2.7bn.
Statutory pre-tax profit of around £35mln, the Bloomberg consensus, would be a less than half last year’s figure, reflecting restructuring and the so-called transition costs.
Investors will also be looking for free cash flow guidance, as the company seemed to drop its commitment to being free cash flow positive in the new financial year in its July update.
Modest improvement expected for Barratt
It may be interesting to see how Barratt acknowledges the impact the recent political uncertainty has caused for the sector.
Analysts at Peel Hunt are expecting modest volume growth from the firm in the first 15 weeks of its current year, while housing shortages and government support through the Help-to-Buy scheme continue to serve as longer-term positives.
Cost inflation is also expected to hold between 2-3%, although Peel Hunt noted comments that suggested this could “soften” as labour moved towards residential construction away from the lagging commercial sector, which could reduce pressure to up wages and attract builders.
All about iron ore for Rio
Wednesday’s operations review will focus on iron ore shipments and production from Pilbara in Australia, plus production of other metals, including copper.
In the first half of the year Rio saw an 8% decline in iron ore shipments from Pilbara due to weather disruptions and mine operational challenges, though the company also rolled out the “world’s largest robot” – its automated train system.
This will arguably fade in importance in comparison with a strategy day due on the last day of the month.
Analysts at Credit Suisse, who downgraded Rio to ‘underperform’ in July, said they continue to focus on increasing iron ore supply out of both Brazil and Australia and potential for demand moderation in China as the key drivers of their negative stance on a 12-month view.
With the implied iron ore price sitting at around US$80-85 per tonne in both 2020 and 2021, CS also flagged the risk of downgrades to consensus earnings estimates “as the softness in iron ore markets becomes increasingly apparent, particularly for 2021”.
Significant events on Wednesday 16 October:
Economic announcements: UK inflation, EU inflation, US MBA mortgages, US retails sales, US Beige Book