Despite the geopolitical uncertainties and challenges of 2022, Clarkson, a shipping company, is expected to confirm a stronger 2021.
Peel Hunt, a stockbroker, stated in a note that “we believe the structural trends will not change materially in FY22”, where he expects solid growth in shipping demand and hopes that Covid restrictions will be lifted so economic growth can recover further. We expect the Clarksea Index to rise from c.$28.500 in FY21 to $33,000 by FY22E.
We believe that this assumption is conservative, given the rise in Chinese coal imports after the Winter Olympics in Feb 2022. This trend has already been clearly seen. We expect tanker demand to recover as OPEC+’s oil production increases by 0.4m bpd each month. So, by September 2022, both output and seaborne nonsanctioned oils should be at the same level pre-pandemic.
Roisin Currie, the new chief executive of Greggs PLC (LSE: GRG), is making a big change at the top.
Currie joined the board as CEO designate in February after 12 years as head retail. He will not assume full control until Roger Whiteside leaves after May’s AGM. Tuesday’s full-year results will give an idea of what’s coming.
Whiteside will be a difficult act to follow, and indeed, he has made his successor targets for 2026 known by Shore Capital.
For the 52 weeks ending 1 January, sales of £1.23bn were reported, an increase of £811mln from the previous year. Attention will now be paid to how rising raw material costs are impacting margins and the effect of Covid restrictions being lifted on the return of work.
UBS expects favourable results when Direct Line Insurance Group PLC(LSE: DLG), announces results on Tuesday. Pretax profit is forecast at PS469mln. The Swiss bank forecasts a £325mln Underwriting result, an increase from £268mln.
UBS has given the insurer a “buy” rating with a target price of 33p.
Bakkavor, a ready-meal manufacturer, reports Tuesday. It expects, in a rising cost environment, to report a strong performance and a material improvement of net debt.
The stockbroker stated in a note that the stockbroker’s forecasts for this year include the material cost increase and the inevitable timing of price increases to benefit. These costs are not included in other consensus forecasts, so we expect numbers to be closer to our level.
Ibstock will publish its full-year earnings on Wednesday. The brickmaker’s cost-cutting efforts and status as a supplier are expected to keep it from inflationary pressures. The Covid pandemic saw housing demand hit a peak as people sought out turn-key homes in areas far from major cities.
This allowed house prices to increase by more than 10% last fiscal year. However, construction costs have begun to spiral with output prices increasing 6.2% in the twelve months to December according to the ONS.
Although cost inflation may soon surpass prices, Hargreaves Lansdown believes Ibstock should be protected from inflation risks immediately. This is due to targeted £20mln cost savings in 2021 and the ability of builders to pass on the rising cost to Ibstock.
Hargreaves Lansdown anticipates that full-year revenues will have increased 29% to £409mln versus 2020 and underlying cash profits of approximately £93mln, slightly more than previous guidance.
Matt Britzman, Hargreaves Lansdown equity analyst, stated that “supplying bricks for building houses rather than selling them” provides shelter from a drop in housing demand.
“Nevertheless, we’ll still be interested to hear any comments on how housebuilders are holding up.”
Investors can also expect updates on Ibstock Futures’ new business segment. It uses £50mln for the construction of the UK’s first brick slip plant.
Shareholders of DS Smith PLC, (LSE: SMDS) will eagerly await the release of the third-quarter trading update for the company next Thursday. This will allow them to determine if Russian sanctions have had any effect on the company’s performance.
Sophie Lund-Yates is an equity analyst at Hargreaves Lansdown. She stated that although Hargreaves Lansdown doesn’t operate directly in Russia, it was difficult to predict the full impact of economic sanctions. The update will provide more clarity about any possible impacts.
The large demand for packaging products in September’s report helped offset the higher production and transportation costs. Lund-Yates says that investors should also be aware of rising input costs.
While input costs have been rising for a while, DS Smith has seen a rise in its prices without experiencing a drop in demand. But, there is a point when higher prices could begin to impact volumes. We’ll be watching to ensure that the group doesn’t reach this tipping point.
The shares of the company have fallen over the past six months. It currently trades at 296p, 34% lower than the September trading price of 449p.
After a turbulent start to 2022, Capita investors look forward to a positive future
After seeing its share prices contract nearly 40% over the past year, the outsourcing company has left the FTSE 250 during this week’s reshuffle.
Investors will keep an eye on Capita’s difficult turnaround. It began in 2018 with a £720mln restructuring plan with Capita stating it would require another £80mln by March 2020.
The company is on a disposal spree, including the £62mln sales of its software division in Oct and the £380mln June sale of its 51% stake at Axelos. With a target of £700mln in 2021 and 2022,
“Outsourcer Capita tried to streamline its operations, cut debt and offload parts of its portfolio, but that has not stopped the loss of faith,” Susannah Streeter from Hargreaves Lansdown said this week.
“After years of falling revenues from contracts lost, the restructuring drive has yet not to reap its rewards, disappointing investors with no significant turnaround yet.”
Berkeley Group Holdings PLC (LSE: BKG) has enjoyed a great run in the past few years, but now a few more headwinds have started to blow.
London and the south-east builders will need to cope with an increasing interest rate environment. Cladding remediation is still unknown, as material and staffing costs rise.
Berkeley increased its annual guidance by 5 percent with its interims. Brokers are pencilling in £544mln versus £518mln full-year, which is likely to be repeated at the third-quarter update.
The group reiterated its commitment to return £282mln annually to shareholders until 30 September 2025. Any surplus cash will also be returned. It would be a shock if this is not done.
On Friday, there will be plenty of macro data including the UK gross national product (GDP), the estimate for January from the Office for National Statistics.
The IMF has decreased its UK 2022 GDP forecast to 4.7%, from 5.0% in its January forecast. However, the Office for Budgetary Responsibility forecasts a 6% GDP increase this year.
After the devastating pandemic in 2020, which sent shockwaves through the global economy, GDP rose by 7.5% last year.
“The UK’s economy should have shown signs that it is recovering from the Omicron effect,” stated Susannah Streeter (senior investment and market analyst Hargreaves Lansdown). However, there are concerns about the impact of the conflict in Ukraine on the economy moving forward.
“It seems that the sanctions and invasion repercussions will likely increase inflationary pressures more than they reduce growth. Therefore, the Bank of England can still expect to raise rates at its next policy meeting.
Streeter said that the latest figures will show how resilient the UK economy is to price pressures and uncertainty.
Major announcements are expected in the week of 7-11 March 2022
Interims: Physiomics PLC (AIM: PYC)
Economic data: Consumer Credit (US), Halifax House Price Index (UK)
Finals: Clarkson PLC (LSE: CKN), Downing Renewables & Infrastructure Trust (LSE: DORE) PLC, MTI Wireless Edge
Finals: Glenveagh Properties PLC (LSE: GLV), Greggs PLC (LSE: GRG), Gresham Technologies plc (LSE: GHT), H&T Group PLC (AIM: HAT), Johnson Service Group plc (LSE: JSG), Keller Group PLC (LSE: KLR), M&G PLC (LSE: MNG), Made. come Group PLC, Midwich Group PLC (AIM: MIDW), Robert Walters PLC (LSE: RWA), Wood Group (John) PLC, IWG PLC (LSE: IWG), Bakkavor Group PLC (LSE: BAKK), Bango PLC (AIM: BGO), Capital & Regional PLC (LSE: CAL), Capricorn Energy PLC, ConvaTec Group PLC (LSE: CTEC), Direct Line Insurance Group PLC (LSE: DLG), Domino’s Pizza Group PLC, ENGAGE XR Holdings PLC, Fresnillo PLC (LSE: FRES)
Trading announcements: Ashtead Group Plc (LSE: AHT)
AGMs: Caretech Holdings PLC, Driver Group (AIM: DRV) PLC, RedX Pharma PLC, Schroder European Real Estate Investment Trust PLC
Economic data: Wholesale Inventories (US)
Finals: Prudential PLC (LSE: PRU), Quilter PLC (LSE: QLT), Somero Enterprises Inc, STV PLC, Biffa PLC (LSE: BIFF), Ibstock PLC (LSE: IBST), Tullow Oil, 888 Holdings PLC (LSE:888), Alfa Financial Software Holdings Ltd, Breedon Group Plc (AIM: BREE), Foresight Solar Fund Ltd (LSE: FSFL), Headlam Group (LSE: HEAD) PLC, Ibstock PLC (LSE: IBST), Legal & General Group PLC (LSE: LGEN), Network International Holdings,
Interims: Kier Group PLC (LSE: KIE), Thinksmart Ltd
AGMs: MTI Wireless Edge
Economic data: MBA Mortgage Applications (US), Crude Oil Inventories (US), Retail Sales (UK)
Finals: Secure Income REIT PLC (AIM: SIR), Spirax-Sarco Engineering (LSE: SPX) PLC, Spirent Communications (LSE: SPT) PLC, Capita PLC (LSE: CPI)Balfour Beatty plc (LSE: BBY), Hill & Smith Holdings PLC (LSE: HILS), Just Group PLC (LSE: JUST), National Express Group PLC (LSE: NEX), Savills PLC (LSE: SVS),
Trading update: DS Smith PLC (LSE: SMDS)
Interims: Brooks Macdonald Group plc (LSE: BRK), Volution Group PLC (LSE: FAN)
AGMs: BMO Capital and Income Investment Trust PLC (LSE: BCI)
Economic data: Consumer Price Index (US), Continuing Claims (US), Initial Jobless Claims (US), RICS Housing Market Survey (UK), Balance of Trade (UK), Gross Domestic Product (UK), Index of Services (UK), Industrial Production (UK), Manufacturing Production (UK)
Finals: Sig PLC
Trading announcements: Berkeley Group Holdings PLC (LSE: BKG)
AGMs: Myanmar Investments (AIM: MIL) International Ltd, Hardide PLC (AIM: HDD),
Economic data: U. of Michigan Confidence Prelim (US)
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