FTSE 350 Look Ahead: Fevertree, Phoenix, Petrofac And More

By Anna Peel. Originally published at ValueWalk.

Look ahead to FTSE 350, other companies reporting & economic events from 14 to 18 March.

• Fevertree Drinks PLC (LON:FEVR) will be looking to keep investors updated on cost control measures as inflation hits
• Phoenix Group Holdings PLC (LON:PHNX) should announce a higher dividend
• We’ll get an idea of Petrofac Limited (LON:PFC)’s plans for its Russian business
• We’ll see how Zara parent Inditex (BME:ITX) is coping with inflation
• A rate rise is likely to be on the cards at next week’s Bank of England MPC Meeting
• The long tale of struggle continues at Cineworld Group plc (LON:CINE)

Q4 2021 hedge fund letters, conferences and more

Phoenix Group, Full Year Results, Monday 14 March

Steve Clayton, HL Select Fund Manager

“Investors will be hoping for an update on the group’s new business volumes at Phoenix Group’s full year results, and their progress on integrating the businesses acquired in recent years. Given market volatility, the group’s capital reserves will be closely examined. With no surprises expected, given the Group’s robust hedging strategies, there should be news of a higher dividend on the day.”

Petrofac, Full Year Results, Tuesday 15 March

Laura Hoy, Equity Analyst

“The ballooning price of oil over the past year is likely to have helped Petrofac, but that’s unlikely to be the focus when the group reports next week. Instead, the crisis in Ukraine and Petrofac’s next steps for its Russian business will likely be front and centre. Russia made up 4.5% of the last year’s total revenue, a relatively small slice of the overall pie. But that’s not to say it’s inconsequential. On top of the added revenue, Russia’s been identified as a potential growth avenue moving forward. Wiping this from the plan will make it harder to grow the all-important order book.

Speaking of the order book, that will be a key figure to watch. The fraud investigation last year meant the group was iced out of lucrative markets, the UAE and Saudi Arabia. Now that it’s been wrapped up, the group’s free to do business in these regions. The group’s Russian operations hang like a dark cloud over its potential as a dealmaker, with many businesses unwilling to associate with the region given the tragedy in Ukraine. The big question is how much of the $32bn scheduled for award by the end of 2022 will come Petrofac’s way—and how much of that figure is tied to Russia and will be off the table for the entire industry.”

Fevertree, Full Year Results, Wednesday 16 March

Matt Britzman, Equity Analyst

“In January’s trading statement sales growth had continued across all markets over the year. Sales from supermarkets were above pre-pandemic levels, with more lucrative bars and restaurants recovering in the second half. Next week we’ll see how that’s fed through to profits. Supply chain disruption and broader uncertainty were called out as margin dampeners, while costs headwinds are expected to impact 2022 trading. Markets are expecting cash profit (EBITDA) to come in around £61m and we’ll be watching for commentary on how the group aims to keep rising costs in check.

The US remains a key are for expansion, but logistical challenges have proven a bugbear so far. New bottling partnerships in the US are key for easing some of the pain points. It’s expected that a second site will ramp up production in the first half and so there should be an update in this area.”

Inditex, Full Year Results, Wednesday 16 March

Laura Hoy, Equity Analyst

“The post-pandemic recovery at Zara parent Inditex has been impressive.  The question now is whether this can continue. In the third quarter, sales were up 10% on 2019 levels meaning the recent growth is more than just an easy comparison against lockdowns. However, after 18 months stuck inside, some of those purchases are simply the result of pent-up demand and dated wardrobes.

Looking forward, the focus is on Inditex’s ability to navigate the current inflationary headwinds. Rising costs are a bad thing for any retailer, but Inditex’s price-point – not luxury, but not really discount – will make this even more challenging. Its customers might start to slide down the value chain toward lower-priced alternatives. Meanwhile, luxury clientele haven’t tended to react much to rising prices and could stay put leaving Inditex as the odd one out. Sales in November and the start of December were also 10% above 2019 levels, suggesting customers aren’t tightening the purse strings just yet. The group’s nearly completed its shift to an online inventory model, which should make it easier to navigate supply chain issues and control inventory. Inventory was up 19% at last check, so there will be expectations for that to remain relatively constant or decline moving forward. Too much excess stock could lead to extra discounting, which would eat into margins at an already trying time.”

Bank of England Monetary Policy Committee Meeting, Thursday 17 March

Susannah Streeter, Senior Investment and Markets Analyst

“The breath-taking rise in commodity prices since the invasion of Ukraine will worry Bank of England policymakers on two levels. It is set to cause inflation to run even hotter than forecasts in the months to come, with speculation that the CPI index will soar way over 8% and could even hit double figures. The double whammy is that these super high prices affecting oil, metals and grains may be hard to bear for companies and consumers, leading to less spending and investment and could push the recovery into reverse. Already household confidence has hit the lowest level in a decade according to the most recent YouGov survey. The Bank of England’s main task is to maintain stable prices and oversee financial stability, and rip-roaring inflation risks undermining that and overall economic health. So steering inflation back to the target of 2% is still set to be its priority and it’s still highly likely a rate rise will be on the cards next week. But given the escalating situation, with fresh sanctions being placed on Russian oil exports, policymakers are expected to limit the rise to 0.25% which would push the bank rate to 0.75%, to try and dampen demand but not squeeze life out of the economy.”

EMIS Group, Full Year Results, Thursday 17 March

Steve Clayton, HL Select Fund Manager

“EMIS Group report full year figures on Thursday 17 and analysts are forecasting revenue growth of around 4% and a 10% increase in the dividend. With the NHS returning to a more normal pattern of activity, EMIS should be well placed to press harder on new business winning in the year ahead and the market will be eager to learn about their expectations on this front. With net cash of over £60m likely, EMIS are expected to be on the lookout for deals.”

Cineworld, Full Year Results, Thursday 17 March

Susannah Streeter, Senior Investment and Markets Analyst

“The long tale of struggle continues for Cineworld so investors will be on the alert for any sign of even a slight recovery in its fortunes. Its share price has been bumping along in the cheap seats for so long it will soon leave the FTSE 250, after being kicked out at the reshuffle in early March. Although the rush of Bond and Spiderman bookings came as a new uplifting scene for Cineworld, the brief euphoria hasn’t lasted, and the company is still reeling from the punch delivered by the Supreme Court of Justice in Ontario which ruled in favour of the Cineplex chain of cinemas in its legal battle against the company. The full easing of pandemic restrictions should help put more film fans into seats and an update on bookings will be closely watched. But it’s unlikely that ticket sales will ever fully recover to the heady days of the past, given the huge shake-up of the movie industry.  Cineworld is desperate to drag movie lovers from the comfort of their own sofas back to the big screen experience so investors will also be watching just how high it’s willing to push capital expenditure to provide technological cinema innovations, given that it comes at a time when the company is grappling with a high level of debt.”

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18-Mar

*Events on which we will be updating investors

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Updated on Mar 10, 2022, 11:36 am

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