- Mondi (Interim Results): The company reported stronger than expected results in its first-quarter trading update, with underlying profit up 15% y/y to €295 million. This was due to higher average selling prices and profit improvement initiatives across the group, which more than offset higher operating costs, the impact of maintenance shuts and negative currency effects. Management said it expects the business to be supported by continued strong pricing momentum and good demand growth, which could be partially offset by inflationary cost pressures and currency headwinds for the remainder of the year.
- MTN (Interim Results): In the company’s first quarterly update, the group reported subscriber growth of 1.9% quarter-on-quarter, with net additions of 4.1 million. The group reported only marginal growth in SA, with revenue up 2.5% while EBITDA margin improved 150 bps to 35%. Group voice revenue increased 5.4% due to strong growth in Nigeria and Ghana, while data revenue grew 26.9% due to the execution of the group dual-data strategy.
- Nedbank (Interim Results): According to a recent trading statement, headline earnings per share are expected to be between 23% and 28% higher y/y, well ahead of full year expectations (Bloomberg: +15.4%). The solid performance was supported by share of associate income from ETI on the back of its return to profitability. Managed operations recorded positive earnings growth which was in line with expectations.
- Liberty Group (Interim Results): In its first quarter operational update, the company reported mixed results, with a strong performance from the corporate business offsetting weak business volumes from the retail insurance division. Asset management continued to drag heavily on the performance due to lower investment market returns over the quarter. Management noted that its turnaround strategy is being executed, with a focus on new business volumes and expense control.
- The JSE (Interim Results): Management guided for HEPS to be between 30% and 40% higher y/y, ahead of full year expectations (Bloomberg: +15.5%). This was mainly due to stringent cost control measures, a one-off taxation credit of R31 million and overall revenue growth.
- On a local corporate actions front, Tuesday marks the last day to trade in JO:Nampak to receive its most recently declared distribution, and the company will trade ex-dividend on Wednesday. Pick n Pay Stores, Adcorp, Taste Holdings and Altron will host AGMs next week.
Second quarter earnings season remains on the go in the US with ~147 S&P 500 companies set to report next week. The tech sector will be closely watched as iPhone producer Apple (NASDAQ:AAPL) prepares to release quarterly results. Tech giants within the US have delivered a mixed performance over the last week with FANG stocks coming under pressure following a particularly significant sell-off in Facebook (NASDAQ:FB). The social media kingpin has recently been under pressure due to data-leak issues and fake news scandals, reflective in the quarterly result. Despite beating earnings expectations, the group’s share price tumbled by 19% as weaker than expected revenue growth and global daily active users raised concerns amongst investors. Looking at expectations for Apple’s upcoming result, Bloomberg estimates are guiding for robust earnings (+29.3%) and revenue growth (+15.2%) over the quarter. Bloomberg Intelligence highlighted that iPhone sales were up 14.4% y/y during the second quarter after Apple launched three new models in the fall. The decision to expand the iPhone product line appears to be working well for the group and is likely to continue into the next quarter. Investors will also look ahead to results from the several food producers including Yum! Brands (NYSE:YUM), Kraft Heinz and Kellogg as well as pharmaceutical conglomerate Pfizer, multi-national consumer goods corporation Procter & Gamble and apparel producer Ralph Lauren (NYSE:RL). Warren Buffett’s holding company Berkshire Hathaway (NYSE:BRKa) will also grab investors’ attention towards the end of the week.
According to Factset, 17% of the companies in the S&P 500 have reported earnings thus far with 87% reporting earnings above the mean estimate and 77% having reported sales above the overall expected average. So far, for 2Q18, the blended earnings growth rate for the S&P 500 is 20.8%. This will be the second highest earnings growth rate since 3Q10 (34.1%) if it can be sustained for the quarter.
In Europe, the focus will be on the financial sector as Standard Chartered (LON:STAN), Barclays (LON:BARC) and Credit Suisse (SIX:CSGN) all prepare to release half year results. Bloomberg is guiding for double digit earnings growth from all three counters over the full year with the strongest performance expected from Barclays (+49.2%). According to Bloomberg Intelligence, Barclays has been successful in reducing some of the company specific headwinds experienced during the first half however uncertainty associated with Brexit remains a concern. Results out of BP (LON:BP), Rio Tinto (LON:RIO), Rolls-Royce (LON:RR), Volkswagen (DE:VOWG_p), HUGO BOSS, Ferrari (NYSE:RACE) and Heineken will also be in the spotlight next week.
In the Asia-Pacific region, market participants will shift their attention towards quarterly results from several Japanese vehicle producers including Honda, Mazda, Suzuki, Toyota and Isuzu. While most of these counters are expected to report a fall in full year earnings, Bloomberg has guided for positive growth from Suzuki (+7%) and Isuzu (+10.8%). Based on a Bloomberg Intelligence report, it is unlikely that Suzuki’s June-quarter earnings deteriorated as much as expectations. The vehicle producer’s sales in India, where it has a dominant position, increased by 25.9% between April and June. Upbeat mini-vehicle sales also boosted domestic shipments by 8.5% during the same period.
Analysts: Thabiso Mamathuba, Pritu Makan