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FTSE 350 Look Ahead: AG Barr, Keywords, Pennon

By Anna Peel. Originally published at ValueWalk.

market rally worst performing mid cap stocks in 2022

Look ahead to FTSE 350, other companies reporting & economic events from 28 March to 1 April

  • AG Barr PLC (LON:BAG) should let us know how it plans to offset inflation
  • Keywords Studios PLC (LON:KWS)’s operating margin outlook will be in the spotlight
  • Recovering demand should help Pennon Group plc (LON:PNN) move closer to its revenue target

Q4 2021 hedge fund letters, conferences and more

AG Barr, Full Year Results, Tuesday 29 March

Sophie Lund-Yates, Equity Analyst

“Full year revenue is expected to be around the £267m mark for the IRN-BRU and Rubicon maker. That comes as the group recovers from the impact of restrictions last year, and encouragingly, sales are expected to be above pre-pandemic levels. So, failing any unexpected upsets on that front, attention will be turned to inflation. AG Barr is facing the effects of rising packaging and energy-linked commodity prices, and it will be interesting to see what this will mean for the operating margin outlook – this is expected to be 15.6% for the last financial year.

Efforts to offset inflation could present in a number of different ways, including further price increases. Well-known brands give AG Barr the firepower to do this to some extent, but its products don’t exactly fall into “premium” territory, so pricing power may be limited. That puts the onus on volumes, as well as further cost cuts. The latter could be a cause for concern if it comes at the expense of marketing budgets.”

Keywords, Full Year Results, Wednesday 30 March

Sophie Lund-Yates, Equity Analyst

“A positive tone is expected from Keywords next week, with full year revenue and underlying pre-tax profit of €512m and €86m respectively. That’s slightly higher than the estimate given when guidance was raised in December. The outsourced gaming industry supplier has been enjoying the spoils that come with the growing gaming industry, with increased demand thanks to lockdown-induced behaviour changes.

As ever, nothing’s perfect though. Focus will be on how Keywords plans to keep sales moving forwards at a rate impressive enough to keep margins sustained. These are currently being inflated by temporary tailwinds like reduced staff travel. An area holding the group back is an inability to find enough highly skilled game developers. Fixing that will likely mean higher wages, and from both a cost and competitive perspective, investors will want to see this situation being managed. This is unlikely to have a huge effect on margins, but it’s still something to keep an eye on.”

Pennon, Trading Statement, Friday 1 April

Laura Hoy, Equity Analyst

“With lockdown restrictions behind us, the shape of demand recovery is the most important thing to watch at Pennon. Water demand fell when businesses were closed, and the beginnings of a strong recovery were evident at the half-year. That should have improved even further, but the big question will be whether household demand stuck around, although Pennon should benefit from the hybrid work-from-home model. This led the group to up its full year revenue expectations to £644.6m, so all eyes will be on whether this is still achievable.

Between the group’s substantial shareholder returns and its Bristol Water acquisition, debt has started to creep uncomfortably higher. Investors will be looking to see the group start to chip away at this, as rising interest payments might start to eat into the bottom line. We’re also keen to hear Pennon’s take on Offwat’s investigation into river pollution and how that might impact profits moving forward. With environmental responsibility becoming increasingly important to both investors and the government, the outcome could dent profitability if it is unfavourable.”

28-Mar

No Reporting Companies

29-Mar

AG Barr* Full Year Results
Bellway Half Year Results

30-Mar

Keywords* Full Year Results

31-Mar

BBGI Global Infrastructure Full Year Results
3I Infrastructure First Quarter Pre-Close Trading Statement

01-Apr

Pennon* Trading Statement

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