Among the companies currently planning to release results next week:
- imperial brand Updates on the progress of the next generation should be provided.
- we will seek progress Royal MailNegotiate with unions about layoffs.
- State Grid It should outline how its heavy-electricity business plan will meet ballooning demand.
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Among the companies currently planning to release results next week:
*We will update the event for investors.
Imperial Brands – Matt Britzman, Equity Analyst
As we enter the second year of the Imperial brand’s five-year strategic plan, the focus remains on increasing market share in the group’s core markets (US, UK, Spain, Germany and Australia), which account for around 70% of profits. Last year’s trend appears to be continuing, with growth in the US, UK and Spain making headway, but Germany and Australia are still struggling to crack.
Half-year results are expected to be impacted by a return to normal purchasing patterns in Europe, offsetting growth elsewhere. Revenue is expected to be flat, with operating profit up a few percentage points. Eye’s will be watching next-generation product (NGP) losses as they are expected to shrink. Progress on this front is important given that the shift away from traditional tobacco products is key to future growth. We were told to look forward to updates on next steps, and finally we heard promising trials of Pulze heated tobacco in Greece and the Czech Republic, as well as blu vapor in the US.
Negotiations are underway to transfer the group’s Russian assets, and operations in the region will be suspended in early March. Operationally, the region (including Ukraine) accounts for about 0.5% of operating profit, so should not have a material impact on trading performance.
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National Grid – Laura Hoy, Equity Analyst
National Grid (NG) is at an inflection point as the transition to renewable energy increases demand on its network. How NG plans to emerge and meet the growing wave of new connected applications is our focus. A spate of acquisitions and sales by the group means its portfolio is now heavily weighted towards power, which is paying off as inflation is expected to push profits ahead of forecasts. But it is subject to regulation, which will determine how much of the returns will go towards building a more capable grid. As the cost of living crunch continues to intensify, this push to increase investment will be accompanied by pressure to reduce customer bills.
Another important factor to watch is how the group’s disposal is progressing. In order to acquire Western Distribution, State Grid obtained a short-term bridge loan. These will be repaid through the sale of the group’s gas business. While everything appears to be underway so far, we would like further confirmation that the sale will still be completed in the coming months, especially as rising interest rates make such loans more risky on paper.
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Royal Mail – Laura Hoy, Equity Analyst
Royal Mail is in a tricky position in its results. The group has been making an impressive turnaround, seeing a shift towards automation and efficiency that has only been helped by the pandemic. Those tailwinds have now dissipated much of the transformation involved cutting costs, and Royal Mail’s biggest cost is its vast network of staff. The group aims to cut 700 management positions, saving £40m a year. But with rumours circulating and unions unhappy, we wonder if progress has been made. Not to mention the mounting pressure on employers across the country to implement pay raises to keep up with the rising cost of living.
Commentary around this issue is the focus of the market, but there are other key factors to watch. We hope to see the group get on track with its planned automation investments and that spending doesn’t get out of hand. Management forecasts the investment cost for half a year to be “well over £400m”. With inflation pushing up construction costs, we’re curious to know what that means. We’ll also be looking at package volumes, which have declined from pandemic highs. However, they appear to be rebasing at higher levels, a trend we expect to see solidified in the full-year results.
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