Rolls-Royce and WM Morrison Supermarkets in the spotlight on Thursday

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Rolls-Royce Holdings PLC (LON:RR.), one of the most popular stocks in the UK in recent weeks, will be glad to see the back of 2020 but it has to look back one more time with its full-year results statement.

The aerospace engineer updated the market in January and said trading in December was “broadly in line with expectations across all business units”; the phrase “broadly in line” is City code for “not quite as good as we expected”.

Having been hit hard by the coronavirus (COVID-19) pandemic for much of the year, the last thing the company needed, given its reliance on aircraft engine maintenance revenues, was additional uncertainy at the end of the year caused by new strains of the virus.

“There’s no doubt it’s been a tough year for Rolls Royce, the question is whether it was even worse than expected. Rolls Royce hoped widebody engine flying hours would rise to 55% of 2019 levels by the end of the year but an unexpected round of further restrictions means we’d expect to see that forecast downgraded,” said Laura Hoy, an equity analyst at Hargreaves Lansdown.

“Long-haul travel looks likely to be disrupted well into summer. We’d like to know what that means for management’s target of turning free cash flow positive in the second half. Progress on the group’s massive restructuring plans is something else to watch, with 9,000 redundancies underway as part of a £1.3bn cost saving target,” she added.

More reasons to relegate Morrisons?

WM Morrison Supermarkets PLC (LON:MRW) is releasing its full-year results on Thursday, just as it’s about to be relegated from the FTSE 100 as part of the latest quarterly reshuffle.

Shares are a few pence lower than they were a year ago, which AJ Bell said it seems “a bit ungrateful when you consider how important the company has been in keeping the nation fed and watered during the pandemic”.

Sales have been going up but were matched by charges of £280mln to follow COVID-19 safety measures, while the grocer also said it would repay £274mln in business rates relief. Management guided pre-tax profit excluding exceptional items at £420-440mln, with analysts forecasting £431mln.

With the supermarket chain having already declared an interim dividend of 2.04p a share and a special dividend of 4p, analysts are expecting a final payment of 4.75p and increases in payouts in the next two financial years coming.

The market will also be looking to what’s in store in 2021 with sales growth at the start of the year, to see if trading has been holding up in the current lockdown, and comments on what’s expected as the UK opens up the economy again.

Thursday 11 March

Trading update: IG Group (LON:IGG)

Finals: Rolls-Royce Holdings PLC (LON:RR.), WM Morrison Supermarkets PLC (LON:MRW), WPP PLC (LON:WPP), Derwent London (LON:DLN), James Fisher and Sons (LON:FSJ), Just Group (LON:JUST), Marshalls (LON:MSLH), Playtech (LON:PTEC), Savills (LON:SVS), Spirent (LON:SPT), Equiniti (LON:EQN), Eurocell (LON:ECEL), Gem Diamonds (LON:GEMD), Gresham House PLC (LON:GHE), Helios Towers (LON:HTWS), Secure Income REIT (LON:SIR), Oakley Capital Investments Ltd (LON:OCI), TCS Group (LON:TCS)

Interims: Brooks Macdonald Group plc (LON:BRK), Go-Ahead Group (LON:GOG), Volution Group (LON:FAN)

Economic announcements: UK RICS housing survey, US jobless claims, job openings

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