Consumer goods, telecoms and utilities are among the sectors with key constituents reporting in the coming week, while the mining industry will also see production updates from blue-chip firms.
On the macro front, investors will likely be awaiting the UK retail sales data and flash PMIs at the end of the week, as well as jobless claims and flash PMIs from the US on Thursday and Friday respectively.
Miners unearth production figures
Mining giants will deliver production updates for the past quarter this week, a period which has seen prices for several commodities on the up, with BHP Group PLC‘s (LON:BHP) due on Tuesday, and Antofagasta PLC (LON:ANTO) and Fresnillo Plc (LON:FRES) both to report on Wednesday,
Blue-chip rivals Rio Tinto and Anglo American both recently provided their own updates, with Rio reporting mostly higher production compared to the preceding quarter, while for Anglo it was mostly lower.
In April, fellow FTSE 100-listed diversified mining giant BHP maintained production guidance for most of its copper, petroleum, iron ore and metallurgical coal operations, saying its business was “resilient” and it expected to continue to generate “solid cash flow”.
A month later, copper king Antofagasta made a U-turn on its final dividend for 2019 because of an increase in the number of new coronavirus infections in Chile, where the company has its major operations.
Shares in ‘Fags’ are up 9% since the start of the year, while BHP’s are flat. Meanwhile, for Fresnillo, a precious metals specialist, its shares have zoomed almost two thirds higher since the start of the year.
The Mexican miner saw both silver and gold production fall last year and said in May that its response has been to increase the pace and scale of investments to bring production “back to acceptable levels in the short-term and to achieve steady growth in future years”, with operations continuing through the pandemic.
TalkTalk calls in with trading update
A trading update on Tuesday from Talktalk Telecom Group PLC (LON:TALK) may not be eagerly awaited by investors after the company warned last month that it is expecting to suffer a £15mln hit from the coronavirus (COVID-19) pandemic in its current financial year.
However, it said then that underlying earnings (EBITDA) are expected to be stable during the year alongside a maintained dividend of 2.5p, so shareholders are likely to keep an eye on any changes to that guidance as the pandemic has progressed.
“Given [fourth quarter] results were only a month ago, we do not expect any significant changes to guidance where TalkTalk is expecting stable EBITDA. Revenues were -4.1% in Q4  and we think this revenue trend has continued into Q1  with revenues being impacted by lower TV revenues (absence of Sky Sports) and lower connection revenues”, said analysts at UBS in a preview.
There may also be interest in the company’s fibre business growth and any cost-cutting measures brought in to lessen the impact of the pandemic as well as declines from its legacy copper wire internet base.
Stagecoach braces for final figures
Full-year results from Stagecoach Group PLC (LON:SGC) on Wednesday are unlikely to contain much positivity in terms of numbers, although they will provide clarity on just how hard the bus and train operator has been hit by the coronavirus pandemic, which has almost ground the UK’s public transport system to a halt amid a sharp decline in passengers.
With the lockdown easing, investors are likely to focus on the group’s outlook for its operations as people begin to step outside and travel more, although the rise in working from home practices could prove more difficult to overcome as commuter traffic may not recover to its pre-pandemic levels.
The company may also provide an update on its cash balances and any additional government assistance it has received during the crisis.
Unilever continues shake-up
Fast-moving consumer goods giant Unilever PLC (LON:ULVR) unveiled plans last month to pursue a single listing on the LSE, taking many on the market by surprise, although the themes behind the decision, namely making the group more agile and making disposals easier, are likely to characterise its half-year results on Thursday.
Investors are likely to look for any details on the group’s tea business, which it put up for sale in January, as well as any other of the company’s weaker divisions which may also have been earmarked for disposal.
Meanwhile, the figures will be inspected for how much damage the coronavirus pandemic has inflicted on the company’s top line, with Unilever exposed heavily to the dining out market which has suffered badly during the crisis.
Analysts at UBS are expecting Unilever’s organic sales to fall 4.7% in its second quarter, driven by a “sharp weakening in Europe” particularly its out-of-home ice cream business which is forecast to see like-for-like sales tumble 40%, although this may be offset by rises in in-home ice cream consumption.
The UBS analysts said the weak Europe performance is also likely to be exacerbated by the pandemic worsening in India and Latin America, which together account for around 23% of group sales.
Shareholders will also be looking at Chinese demand levels, where restaurants have been open for a longer period, as well as any commentary about the group’s outlook for the rest of the year.
There will also be eyes on the state of the dividend after Unilever said previously that it will continue to make payouts despite the disruption to its business.
Sage Group to reveal revenue
On Thursday, Sage Group PLC (LON:SGE) will report on its revenue performance for the three months to June 30, 2020.
Analyst consensus sees revenue growth of just 1% for the full-year to September 30, 2020, compared to 5% growth last year.
According to analysts at Shore Capital, there is downside risk from larger-than-expected declines in SSRS, processing and other revenues (maintenance and support) as well as headwinds around software subscription revenue growth, reflecting increased churn and lower new customer acquisition.
In May, the enterprise software specialist said recent trading had seen a slowdown in new customer acquisition and a slight increase in churn among smaller customers.
“We think it more likely than not that COVID-19 has had a broad impact on businesses generally, resulting in a likely slowdown in net adds and increased churn, despite the fact that many of Sage’s customers are supported by government-backed financial support schemes,” the ShoreCap analysts said.
“While Sage is a well-managed and resilient business and we continue to view the group as a core long-term holding within the sector, we see limited opportunity for outperformance in the near term given potential downgrades to consensus estimates,” they added.
Vodafone to dial in
The mobile telecoms group is under continuing pressure due to its debt pile, as well as concerns over whether the €18.4bn purchase of Liberty Global’s European cable assets was the right thing to do, and the possible costs of acquiring 5G spectrum and equipment in the face of Huwaei’s forced exit from the UK by 2027.
“Nagging doubts over group structure, and whether the firm is basically an investment trust of telecom licences and operations also won’t quite go away, after a period of disappointing profit and cash flow which culminated in 2018’s dividend cut,” analysts at AJ Bell pointed out in a preview.
“Shareholders are now also trying to work out whether Vodafone’s business could benefit from COVID-19 or not, either as consumers downloaded more data and media during lockdown or workers remain at home rather than in the office. CEO Nick Read flagged both trends alongside May’s full-year results but at the same time he cautioned about a hit to roaming revenue thanks to the collapse in international travel for pleasure or business and the risk that some customers find it harder to pay their bills.”
The market will also want to hear about Vodafone’s current €42bn debt pile, alongside updates on the spin-off of its European tower infrastructure arm.
Centrica heats up with final results
Around the same time, the British Gas parent said it is planning to slash 5,000 jobs and downsize its board in what it said was a “significant restructure” to simplify the business model, with fewer business units.
“The announcement seems to reverse an earlier one that said restructuring projects would likely be delayed by coronavirus – so we’re keen for clarification on plans and savings potential next week,” according to analyst Emilie Stevens at Hargreaves Lansdown.
Original expectations were for £350mln in cost savings to be delivered in 2020, adding to the £1.25bn achieved since 2016 and moving the group closer to the target of £2bn in savings by 2022.
The coronavirus lockdown has significantly affected energy usage, with residential usage up but business demand having reduced more significantly.
Centrica has said this prevented it from giving earnings guidance for the year, but with more companies getting back to business the firm could perhaps now give an idea of the outlook.
The key UK macro data will probably come at the end of the week with IHS Markit’s ‘flash’ manufacturing and services purchasing managers’ index surveys for July.
The services PMI is expected to remain around the 47 mark, just below the 50 level that separates contraction from growth, while the manufacturing PMI is seen improving to 53.2 from 50.1. US and data from other countries will also be released on the same day.
Also on Friday there will be retail sales data from the Office for National Statistics, preceded earlier in the week by the CBI industrial trends survey on Thursday and Rightmove’s house price index on Monday.
“The evidence from other countries that exited the lockdown before the UK, as well as more timely data from the British Retail Consortium, suggests there’s a good chance overall retail sales resembled something much closer to pre-virus levels in June,” according to economists at ING.
“We expect to see another sharp rebound, although this probably masks big changes in the way consumers are spending.”
Elsewhere, China’s central bank makes a policy decision on Monday, while US initial jobless and continuing jobless numbers will be in focus on Thursday.
“It’s all about this weekend for Europe,” said the ING economists, however, as EU leaders continue to negotiate a possible coronavirus pandemic recovery fund worth €750bn.
“It’s possible that a deal is reached but more likely that at least one more summit is needed before an agreement is struck.”
Significant announcements expected for the week ending July 24:
Monday July 20:
Tuesday July 21:
Trading updates: BHP Group PLC (LON:BHP), Talktalk Telecom Group PLC (LON:TALK), RPS Group PLC (LON:RPS), DP Eurasia NV (LON:DPEU), Euromoney Institutional Investor PLC (LON:ERM), Intermediate Capital Group LC (LON:ICP)
Wednesday July 22:
Trading updates: Antofagasta PLC (LON:ANTO), Fresnillo Plc (LON:FRES), Melrose Industries PLC (LON:MRO), Britvic PLC (LON:BVIC), PayPoint PLC (LON:PAY), Eve Sleep PLC (LON:EVE), Close Bros Group PLC (LON:CBG), Tristel PLC (LON:TSTL)
Economic data: US home sales
Thursday July 23:
Trading updates: Sage Group PLC (LON:SGE), AJ Bell PLC (LON:AJB), Rightmove PLC (LON:RMV), Tate & Lyle PLC (LON:TATE), Polymetal International PLC (LON:POLY), Brewin Dolphin Holdings PLC (LON:BRW), C&C Group PLC (LON:CCR), Countryside Properties PLC (LON:CSP)
Interims: Unilever PLC (LON:ULVR), Relx PLC (LON:REL), Croda International PLC (LON:CRDA), Beazley PLC (LON:BEZ), Bodycote PLC (LON:BOY), Howden Joinery Group PLC (LON:HWDN), Getbusy PLC (LON:GETB), Mail.ru Group Ltd (LON:MAIL),
Economic data: US jobless claims
Friday July 24:
Economic data: UK retail sales, UK flash PMIs, US flash PMIs