Tuesday preview: Whitbread and Travis Perkins in focus
After a busy week, the UK economic data calendar will quite sparse this week, though there are several companies reporting, including cash-rich Whitbread and troubled Travis Perkins on Tuesday.
Tuesday is due to feature speeches from Bank of England chief economist Andy Haldane at 1230 BST and his boss Mark Carney at 17:20 BST, though neither expected to focus on broad monetary policy.
The CBI is scheduled to release its industrial trends survey at 1100 BST, with economists expecting the balance of firms to rebound moderately to +2 from the -1 result in September.
Pantheon Macroeconomics predicted a fall of -10 in October as the previous month had not fully registered the slowdown reported in the IHS Markit PMI manufacturing survey. "The balance is not seasonally adjusted and has fallen in October in 38 of the last 41 years, by an average of six points."
Kicking off the day there will be a host of company news.
Whitbread will report first-half results, having in August agreed to sell its Costa Coffee arm, which will be listed as discontinued in these results to enable the full focus on its core Premier Inn hotel chain and with more attention on its pub-restaurant brands, including Beefeater and Brewer’s Fayre.
"Having obtained a £3.9bn price tag shareholders will be looking to see how management intend on using some of the cash to expand the hotel side of the business," said market analyst Michael Hewson at CMC Markets.
"It already has plans to expand the number of rooms by over 15% by 2020, while the integration of its restaurants into the overall hotel package has helped to drive up revenue. It is also expanding in Germany in what is still a growing market."
For the first quarter to May, Premier Inn’s growth in revenue per available room worsened to a decline of like-for-like 1.6% from the 1.1% fall in the fourth quarter last year, mostly due to a 4.3% deterioration in London.
"The combination of a step-up in London supply growth over several years and the demand impact of terrorist attacks in mid 2017 were clear in market data," said analysts at Numis. "However, more recently, against the soft comparator from June 2017 (when the London Bridge attack occurred) London RevPAR has now improved markedly."
For the second quarter, Numis estimates Premier Inn will report circa 0.4% growth in the quarter, implying a fall of 1% for the half.
UBS forecasts total revpar of -1.25% from the -1.9% for the first quarter 2019, revenues ex-Costa of £1.1bn, EBIT of £293m and adjusted net profit of £220m.
Looking at Travis Perkins, the builders' merchant's shares are down 38% this year after February's poor final results were followed by a profit warning alongside July's interims due to continuing challenges for its Wickes home improvement division, which has seen a dramatic drop in profits in recent quarters.
The group as a whole reported like-for-like revenue growth of 4.2%, with volumes up 0.8% and price 3.4%.
July's results saw management reveal that "comprehensive review" had begun of the business, having already been chipping away at costs since announcing poor results in February that were blamed on weak consumer confidence and a decline in home improvement. A "significant cost reduction programme" at Wickes is expected to help "drive improved profitability" through the second half of the year.
UBS expects quarterly sales growth of 3.6%, driven by the general merchanting arm, contracts and plumbing & heating, with Wickes down 4%.
"Key will be re-iteration of 2018 guidance after the profit warning in August, which implies broadly flat H218 y/y profitability."
Tuesday October 23
INTERNATIONAL ECONOMIC ANNOUNCEMENTS
Producer Price Index (GER) (07:00)
UK ECONOMIC ANNOUNCEMENTS
CBI Industrial Trends Surveys (11:00)
INTERIMS
1Spatial, Bloomsbury Publishing, Whitbread
TRADING ANNOUNCEMENTS
Anglo American, Bunzl, Mcbride, Plus500, Reckitt Benckiser Group, St James's Place, Travis Perkins
AGMS
Aberforth Split Level Income Trust , Coral Products, Mcbride, Mirada, OPG Power Ventures, Vela Technologies
FINAL DIVIDEND PAYMENT DATE
Renishaw
INTERIM DIVIDEND PAYMENT DATE
Pendragon, Playtech, The Simplybiz Group