Ocado and supermarket trends, BHP and the mining cycle both in focus on Tuesday

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A grocery market update on Tuesday will confirm whether weekly shops are still being done online or back in store as investors try to work out what the ‘new normal’ looks like in the sector.


A month ago, Kantar’s monthly basket of supermarket data showed that total till takings had fallen 5.1% in the twelve weeks to 11 July, though spending was still GBP3bn higher than this time in 2019.


With more people returning to the office, going out to pubs and restaurants again and shopping in shops, the number of people choosing to buy groceries online fell by 81,000 in July compared with the same four weeks last year, while digital baskets shrunk 8% and year-on-year sales growth for online groceries dropped for the first time ever.


Digital sales currently accounts for 13.3% of the total market, compared to 13.4% in June’s update, 13.9% in May’s and the peak of 15.4% in February.


Overall sales growth at Ocado PLC slowed, while the big four of Tesco, Sainsbury’s, Asda and Morrisons saw declined, while discounters Aldi and Lidl continued their resurgence of recent months.


Just Eat serves up interims


Elsewhere, the day’s company results will include half-year numbers from Just Eat Takeaway.com NV (LSE:JET, NASDAQ:GRUB) (LSE:JET, NASDAQ:GRUB), although the firm has already front-loaded most of the key figures in a trading update last month.


At the time, the group hiked its guidance for full-year order growth and said losses had peaked in the first half of the year, with expectations of moving back into profitability in the second half.


With this in mind, the outlook statement will be crucial to see how the loosening of lockdown restrictions is expected to affect demand for takeaway food and delivery, as well as any more details on the group’s investment plans going forward.


Analysts at UBS are predicting revenues excluding US to be EUR1.8bn, up 77% year-on-year, with growth focused in the UK and Germany. For the US, revenues are expected to grow 29% to EUR2.8bn. The investment bank is also forecasting negative earnings of EUR241mln.


Climbing to the top of the mining cycle


Far from being knocked off course by the pandemic, BHP Group PLC (LSE:BHP) (LSE:BHP), which reports full-year results, has been smashing it – as well as making headlines in recent days over reports of the selling of its oil production arm.


As well as perhaps getting more comments from management about their thoughts on oil, another big question that may be answered in the results is whether we are at or near the top of the mining cycle.


“BHP’s shares are trading at pretty much an all-time high, helped by hopes for a post-pandemic economic recovery, commodity price strength and the company’s own capital discipline, which has seen successive management teams rein in capital investment and acquisitions, sell assets and pay down debt,” said Russ Mould at AJ Bell.


“The question then is whether the current earnings and dividend bonanza can last – and analysts do not appear to be convinced. They have sales, profits, earnings per share and dividends falling in the year to June 2023, which is in keeping with central banks’ view that current price inflation is ‘transitory,’ and the result of a post-lockdown surge in demand, production bottlenecks and shipping shortages. If we do get a really inflationary recovery, though, then consensus forecasts could prove conservative, although a downturn would leave them looking optimistic,” Mould opined.


Within the financials, two numbers to watch are capital expenditure and net debt, with the latter standing at US$11.8bn at the half-year stage, below the company’s previous target range, while capex is forecast by analysts to be US$7.3bn for the year.


Major announcements on Tuesday 17 August:


Finals: Van Elle plc, BHP Group


Interims: Plus500 plc, Genuit Group Plc, Just Eat Takeaway.com N.V, Polypipe (LSE:PLP) Group


Economic data: UK unemployment, US retail sales, US industrial production, US manufacturing production

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