GlaxoSmithKline and Berkeley key names in coming week as Bank of England dominates macro dairy

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The coming week is looking like a lighter one in terms of company news, however, there will be a few major names in the diary including blue-chip pharma firm GlaxoSmithKline and housebuilder Berkeley.

Meanwhile, the macro calendar is set to be dominated by the latest decision on interest rates from the Bank of England following the Federal Reserve’s meeting the previous week.

DS Smith unpacks results

Packaging maker DS Smith PLC (LON:SMDS) will report its final results on Tuesday, with investor hoping for some bumper figures as the company raked in cash during the year amid a boom in ecommerce sales parked by the pandemic.

Demand for the company’s corrugated cardboard boxes is expected to have risen by 7% year on year, although the rising cost of material needed to make them may put a dent in the firm’s bottom line.

Another potential pitfall is the hospitality sector, which has been subject to extended periods of closure and therefore the firm’s business in this area is likely to take a hit.

With this in mind, investors are likely to be looking for any comments on how the firm expects to deal with rising costs, as well as how it expects demand to shift going forward as lockdown restrictions are eased.

GSK investors to eye outlook and pipeline in update

Wednesday is due to see an update from pharma giant GlaxoSmithKline (LON:GSK), with boss Emma Walmsley likely aiming to soothe some nerves about the company’s outlook in a bid to fend of agitations for change from US activist investor Elliott.

Walmsley may not have expected pressure from an activist shareholder given her spearheading of a major shift in GSK’s strategy over her four years at the helm, particularly the company’s planned demerger of its consumer healthcare business which is likely to be a key point of interest in the update.

According to a first-quarter update in May, Wednesday’s update will include more info on the demerger as well as details on the company’s overall strategy, its capital allocation plans and its growth outlooks from 2022 to 2031.

Also in focus will be the company’s drug development pipeline, where GSK is hoping to recover following a series of setbacks. A key interest in this area will be the firm’s COVID-19 vaccine, which it is aiming to bring to market by the end of this year.

Flat profits for Berkeley?

The last update from FTSE 100 housebuilder Berkeley Group Holdings PLC (LON:BKG) in March was rather flat, with profits expected to level off in 2021 and 2022 amid volatile trading.

Demand was strong where it has had stock, the Surrey-headquartered group said, but some new developments and phases have been put on hold until the economy opens up post-lockdown.

Still, flat profits will be good enough to underpin Berkeley’s ongoing commitment to returning £280mln of cash a year to shareholders through dividends or buybacks, it said.

Shares in the London-centric company have also been flat this year, underperforming the wider sector, with analysts at JP Morgan recently saying worries about cladding and the pandemic-led ‘de-urbanisation’ exodus from the capital were both being overplayed.

Wednesday’s full-year results should see the numbers come in well ahead of the peer group and the bottom-end of guidance, JP Morgan predicted, with a healthy balance sheet driving another commitment to capital returns.

Increases in the cost of construction materials and shortage of skilled labour have also created another hurdle for the housebuilding industry, among many.

While Berkeley’s relatively high price point and specialism in complex sites mean materials account for a smaller proportion of the overall cost base, as analysts at Hargreaves Lansdown said, it’s something to keep an eye on.

John Wood targets continued momentum as oil prices swing

In a statement at its AGM last month, oilfield services firm John Wood Group PLC (LON:WG.) said trading had been slower than expected as its projects business was hit by the rolling off of several large contracts and its operations division was hit by the COVID-19 pandemic and volatile oil prices.

Despite this, the firm maintained its guidance for the year, so investors will be hoping the company can stay the course in its trading update on Thursday, while also eyeing activity in the firm’s consulting business and an expected uptick in operations from conventional energy demand and chemicals.

In addition to guidance, any commentary on the order books will also attract close attention.

Macro matters

After the histrionics over the Federal Reserve forecasts in the past week, the coming week has some smaller economic titbits for the market to nibble on.

In the UK, we start with Rightmove UK house price index on Monday, with government borrowing figures on Tuesday, flash purchasing managers’ index (PMI) surveys on the manufacturing and services sectors midweek, and GfK consumer confidence data on Friday.

With unemployment coming down and wage growth outpacing inflation, plus worries about the fast rise in cases of the Delta or Indian coronavirus variant, UK consumer sentiment is far from sky-high.

After sinking as low as -34 during the first lockdown in April and May last year, the GfK confidence data had improved to -15 reading in April 2021, improving by one point from March in what was the fifth straight gain.

To reach where we were in February 2020 the reading will need to return to -7.

“Given that service industries represent around four-fifths of UK GDP and household consumption around 60%, the economy is heavily reliant upon consumers feeling confident enough – and being affluent enough – to spend (or at least borrow),” said analysts at Hargreaves Lansdown.

“Retail sales are starting to recover in the wake of the reopening on non-essential physical shops on 12 April. April showed a 9.2% month-on-month increase in volumes and a 42% surge year-on-year as purchases on the high street supplemented, rather than replaced, online purchases.”

Consumer data from the US will also be of interest on Friday, with the release of the Personal Consumption Expenditure (PCE) data, one of the Fed’s preferred indicators of economic health.

With PCE having notched a new monthly record high in April, up 29% year-on-year, this was “not really what economists would expect when a pandemic is still on and unemployment is still elevated, even allowing for the base effect” said the Hargreaves analysts.

“Stimulus cheques must be helping here so it will be interesting to see what happens as the US Government eases off on the so-called ‘stimmy,’ although unemployment is coming down and wages are going up Stateside as well.”

Publicans and broadcasters hope to cash in on Euro fever

Pub groups will have white-knuckle hopes that England won’t get booted out of the Euro 2020 faster than a Coca-Cola at a Ronaldo family picnic.

England’s final group game is on Tuesday night at 8:00pm is presently the last fixture that pubs can bank on, at least until qualification to the knock-out rounds is confirmed.  Each England game at the Euros is believed to be worth millions for pub groups, even whilst customers are restricted to table service in groups of no more than six.

Meanwhile, England’s success or failure is also an important ratings factor for ITV PLC (LON:ITV) and its prime-time ad revenues.

So, quite simply, if by the end of England vs Czech Republic at Wembley on Tuesday, the England team has qualified then there’ll be more chances for much needed revenue in the hospitality sector.

For pub stocks it matters especially because of the four-week delay to ‘Freedom Day’.

Under the original plans, knock-out games could’ve been shown indoors in busier and unrestricted pubs. On-field disappointment, however, will be a double blow for the likes of City Pub Group Plc (LON:CPC), Mitchells & Butlers Plc (LON:MAB), Marston’s PLC (LON:MARS), and Fuller, Smith & Turner Plc (LON:FSTA) as they battle for a Covid recovery.

Significant announcements expected for week ending 25 June:

Monday June 21:

Finals: Brandshield Systems PLC (LON:BRSD), Sysgroup PLC (LON:SYS)

Economic data: US national activity index

Tuesday June 22:

Finals: DS Smith PLC (LON:SMDS), Gear4music Holdings PLC (LON:G4M), Trackwise Designs PLC (LON:TWD), Trifast PLC (LON:TRI)

Economic data: UK industrial trends, US existing home sales

Wednesday June 23:

Trading announcements: GlaxoSmithKline PLC (LON:GSK), Joules Group PLC (LON:JOUL)

Finals: Berkeley Group Holdings PLC (LON:BKG), Liontrust Asset Management PLC (LON:LIO), Manolete Partners PLC (LON:MANO)

Interims: Crest Nicholson Holdings PLC (LON:CRST)

Economic data: UK flash PMIs, US flash PMIs

Thursday June 24:

Trading announcements: John Wood Group PLC (LON:WG.)

Finals: Alpha Financial Markets Consulting (LON:AFM), James Latham PLC (LON:LTHM), XPS Pensions Group PLC (LON:XPS)

FTSE 100 ex-dividends to knock 5.82 points off the index: JD Sports Fashion PLC (LON:JD.), Vodafone Group PLC (LON:VOD), Experian PLC (LON:EXPN), British Land Company PLC (LON:BLND), United Utilities Group PLC (LON:UU.)

Economic data: BoE rates decision, US GDP, US durable goods orders, US jobless claims

Friday June 25:

Finals: Jade Road Investments Ltd (LON:JADE)

Economic data: UK consumer confidence, US personal incomes


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