Some of the local earnings releases to take note of this week include:
Shoprite (1Q19 Operational Update): For the full year, group turnover was up 3.1% with SA Supermarkets revenue up 5.7% while non-SA Supermarkets declined 7.0%. The SA Supermarkets number disappointed relative to the sector and expectations. The decline in non-SA was due to the normalisation of the performance of the Angolan Supermarkets operation following 65% compound growth over the past two years. Per management, sales in the non-SA business is expected to remain under pressure as currency weakness and foreign exchange shortages are expected to persist.
Famous Brands (Interim Results): In a recent trading statement, management guided for HEPS to increase by between 3% and 14%, largely due to an improved performance within SA, rest of Africa and the Middle East divisions. Gourmet Burger Kitchen (GBK) recorded an operating loss of £2.6 million (FY17: £872 000) and the group has taken the decision to record an impairment of R874 million related to this operation.
Premier Fishing and Brands (Full-Year Results): HEPS are expected to decline by between 5% and 12.6% (to between 30.23 and 32.85 cents per share), a significant miss relative to the group’s HEPS forecast of 46 cents at listing. The decrease in HEPS was mainly due to the increase in the weighted average number of shares, which rose by ~29% y/y. These results also excluded R36.1 million of additional net profit from the acquisition of Talhado due to an IFRS technicality.
Impala Platinum (1Q19 Quarterly Update): The group guided for FY19 refined platinum production to be between 1.5 and 1.6 Moz., while operating costs (excluding retrenchment costs) are forecast to be between R23 900 and R24 800 per platinum oz. Capex is planned at between R4.1 billion and R4.1 billion for the full year.
• Sibanye Stillwater (3Q18 Operational Update): At the half year, full-year gold production for the SA operation was revised to between 1.17 million and 1.21 million oz. with all-in sustaining cost anticipated to be between R515 000/kg and R530 000/kg. SA PGM production is likely to be at the upper end of guidance of between 1.1 and 1.15 Moz., with AISC towards the bottom end of guidance, of between R10 750 and R11 250/oz. (i.e. $825 and $860/oz.). Attributable production from the US was maintained between 580 000 and 610 000 oz. with AISC expected to range between $640 and $680/oz.
ArcelorMittal SA (3Q18 Operational Update): Domestic steel demand and exports in 2H18 are expected to remain stable apart from a seasonal slowdown in December. Sales prices are expected to remain stable, with the volatility in the rand/US dollar exchange rate continuing to have an impact on the group’s results.
From a local corporate actions perspective, Tuesday marks the last day to trade in Barloworld (LON:BWOB) (preference shares), Equites Property REIT and PSG Konsult to receive their most recent distributions. These counters will trade ex-dividend on Wednesday. Imperial (JO:IPLJ) Holdings and Grand Parade Investments (JO:GPLJ) will host GMs next week, while AVI, Murray & Roberts and Pembury Lifestyle Group will host AGMs.
Investors can look forward to another busy week in the US with ~135 S&P 500 companies set to release results. The tech sector will likely be in the spotlight as iPhone producer Apple (NASDAQ:AAPL), social media giant Facebook (NASDAQ:FB), and global commerce leader eBay, all prepare to release quarterly numbers. Bloomberg is guiding for positive earnings growth from all three companies. According to Markets Insider, Megacap FAANG stocks have been under significant pressure recently with Facebook, Apple, Amazon (NASDAQ:AMZN), Netflix (NASDAQ:NFLX), and Google (NASDAQ:GOOGL) losing ~$604.3 billion since their recent peak. Concerns regarding slower global growth, higher interest rates and generally weak outlook statements from key counters have led to a harsh sell-off in major global markets. In terms of losses, Facebook has been hit the hardest among the FAANG group. The company’s shares have fallen around 30% since peaking in July, wiping out $188 billion of its market capitalisation. The decline was driven by data-privacy concerns and a fall in users, resulting in lower growth estimates. The food and beverage industry will also be relatively busy next week with results due from Coca-Cola (NYSE:KO), Yum! Brands (NYSE:YUM), Kellogg’s, Kraft Heinz and Starbucks (NASDAQ:SBUX). Other releases to watch include General Electric (NYSE:GE), Mastercard (NYSE:MA), Pfizer (NYSE:PFE), Under Armour, Estée Lauder, General Motors (NYSE:GM), Berkshire Hathaway (NYSE:BRKa), ExxonMobil and Chevron (NYSE:CVX).
According to Factset, 17% of the companies in the S&P 500 have reported earnings so far, with 80% reporting earnings above the mean estimate and 64% reporting sales above the overall expected average. So far, for 3Q18, the blended earnings growth rate for the S&P 500 is 19.5%, which will likely be the third-highest earnings growth rate since 1Q11 (19.5%).
Car producers are likely to generate a significant amount of news flow across Europe (Volkswagen (DE:VOWG_p) and Fiat Chrysler Automobiles) and the Asia-pacific region (Honda Motor, Mazda Motor, Suzuki Motor and Isuzu Motors), as several popular brands are expected to release results. Based on research from Statista, global vehicle sales are expected to come in at 81.5 million units for 2018, an increase of 3.1% compared to 2017. Along with a recovering automotive industry in the UK, Germany, Sweden, Poland and other European Union member states, it is forecast that higher demand for cars from clients in Asia and North America will successfully offset declining vehicle sales volumes in Russia and Brazil. It is also forecast that automobile manufacturers will sell over 81 million vehicles by the end of 2018, up from an average of less than 55 million units in the years between 2000 and 2014. Vehicle producers will likely focus on tapping into the growing affluence of Asian markets, where passenger vehicle sales have doubled over the past seven years. Between 2008 and 2016, car sales were on the rise in Indonesia and India while in China, vehicle sales have quadrupled to 28.9 million vehicles in 2017. Additional results out of the Euro region to take note of include HSBC, Credit Suisse (SIX:CSGN), BP (LON:BP), Royal Dutch Shell (LON:RDSa) and GlaxoSmithKline.
