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Home » Industry News » Business Advisory & Financial Services » FNB – The Week Ahead – Another busy week on the corporate earnings calendar

FNB – The Week Ahead – Another busy week on the corporate earnings calendar

Locally, we expect releases from:

  • Glencore (3Q23 Update) – Per guidance for FY23, copper production is expected between 1 010 and 1 070 kilo tonnes (kt), Cobalt is set to come in between 33 and 43 kt, Zinc is expected between 920 and 980 kt, Nickel is anticipated at 107 to 117 kt, while Ferrochome is expected to be between 1 280 and 1 340 kt, and Coal is set to come in at 105 to 115 million tonnes (mt). This update will show if the company is still on track to deliver these targets.
  • Anheuser-Busch InBev (3Q23 Earnings) – At the half-year point, the group reported a 3% increase in underlying EPS, with a 10% increase in revenue, while volumes fell 0.3% (own beer: -0.8%, non-beer: +2.1%). Margins were under pressure due to anticipated commodity cost headwinds and increased sales and marketing investments. In terms of this update though, underlying EPS and revenue are expected to increase 3.7% y/y and 4.9% y/y, respectively. For the full year, management previously updated for FY23 EBITDA to grow between 4% and 8% (Bloomberg: 2.7%), in line with medium-term targets, with revenue to grow ahead of EBITDA from a healthy combination of volume and price.
  • Impala Platinum (1Q24 Update) – In its outlook for FY24, management noted that production will be supported by volume gains from increased milling capacity at Zimplats and Two Rivers, while better operational stability established at Impala Rustenburg and Impala Canada will improve efficiency. Concentrate volumes from RBPlats were expected to materially increase the production profile of the group. Management noted though that refined volumes will be impacted by the planned rebuild of the Number 5 furnace. We will also be looking for confirmation of previous full-year guidance on production, costs, and capex.
  • Sibanye Stillwater (3Q23 Update) – The group had a tough first half due to lower sales volumes at all PGM operations, significant declines in PGM prices, and lower productivity and increased unit costs which were the result of regional operational challenges. Again, this update will aide us in determining whether or not the company is on track to deliver on previous FY23 guidance.
  • Dis-Chem Pharmacies (Interim Results) – The outlook statement for FY24 in the FY23 filings did not include specifics around sales momentum into the new reporting period. However, management noted that it expected consumers to remain under financial strain and for load-shedding to result in unavoidable operational costs, which will continue to impact earnings. The integration of the healthcare value chain will underpin Dis-Chem’s current and future earnings profile and an imminent distribution centre acquisition will support retail space growth and warehouse capacity, allowing the group to increase store count and market share.

On the corporate actions front, Tuesday (31 October 2023) marks the last day to trade Hyprop and PSG Financial Services (formally PSG Konsult) shares to receive their latest dividend payments. Northam Platinum, Implats, BHP Group, and Murray & Roberts, are some of the companies set to host AGMs during the week.

Earnings season in the US maintains momentum next week as we head into the second half of releases. Of the 233 companies that have released results, 107 companies beat revenue expectations, 66 met expectations and 59 disappointed. Meanwhile, 184 beat earnings expectations, 10 reported in-line numbers and 38 disappointed on the bottom line. Earnings have surprised to the upside by an aggregate 8.59% and revenue has come in 0.97% better than expected. Aggregate sales growth so far has been 4.74%, while aggregate earnings growth has been 13.14%.

Earnings releases in the US will be headlined by Apple Inc., Starbucks, Eaton, and some big pharma names.

  • Apple had a decent third quarter, with both top- and bottom-line growth coming in ahead of expectations. A marginal decline in revenue was attributed to sustained weakness in demand as macroeconomic pressures (such as high inflation and interest rates) continued to weigh on hardware sales, with consumers opting to improve their existing device experience as opposed to upgrading to newer (more costly) models. While the group did not provide formal guidance, management said it expected revenue growth over 4Q23 to be in line with the third quarter, implying ~1% y/y decline (Bloomberg: -0.9%). EPS is expected to increase by just under 8.0%.
  • Starbucks Corp has had a strong year so far, with the group delivering better-than-expected growth across key metrics on the back of higher volumes and spend among customers in 2Q23. Management noted that it would balance strong momentum and optimism with the economic uncertainties as it navigates through the remainder of the year. As such, full-year guidance was maintained to the disappointment of the market as it seemed too conservative given the strong performance. According to Bloomberg, revenue is expected to grow by 10.3%, with adjusted EPS coming in 19.5% stronger.
  • For 3Q23, Eaton management guided for adjusted EPS of between $2.27 and $2.37 (Bloomberg: $2.34) and for organic sales to increase between 9% and 11% y/y (Bloomberg: +11.0%). Demand across its markets has been strong, propelling backlogs to record levels. At the time the group was confident in its ability to capitalise on reindustrialisation in North America and Europe, as well as the secular growth drivers of electrification, energy transition and digitalisation.
  • Coming off a strong first quarter, pharmaceutical giant, Eli Lilly, is set to report an underwhelming 3Q23, with the markets looking for an adjusted loss per share of $1.18 amid a 29.6% increase in revenue. Also in the healthcare sector, CVS and Pfizer are expected to report opposing results over the period. Adjusted EPS and revenue growth for the former is forecast to come in at 2.3% and 8.8%, respectively. The latter is expected to report an adjusted loss per share of -$0.33, amid a revenue decline of 41.0%.

In Europe, we expect results from:

  • BP – The energy company is set to report a decline in both adjusted EPS (-45.6% y/y) and revenue (-1.6% y/y). Management previously guided for upstream production to be flat from 2Q23. Within this, BP said that production from oil production and operations were going to be lower, and gas and low carbon energy were anticipated to increase, including the effects of seasonal maintenance in higher margin regions offset by major project delivery. In its customers’ business, BP was looking for seasonally higher volumes. In refining, BP expected a lower level of turnaround and maintenance activity.
  • Shell – Per a recent trading update, production expectations were mostly in line with the previous quarter, with declines, in part, attributable to divestitures and the de-recognition of Russian exposure; however, the group may see some benefit from the recent rise in prices of refined products, oil, and gas (Shell services ~20% of the worlds LNG demand). According to Bloomberg, analysts are looking for a revenue decline of 12.5% against a demanding 3Q22 base that benefitted from elevated commodity prices. Adjusted EPS is expected to fall by 28.9%.
    Also on our radar, medical equipment manufacturer, Smith & Nephew, is set to provide a 3Q23 update.

Earnings releases in the Asia-Pacific region will be headlined by 3Q23 results from Samsung.

  • As per recent guidance, consolidated revenue is expected to come in between KRW66 trillion and KRW68 trillion, which constitutes a decline of 13% y/y at the midpoint (Bloomberg: -11.8% y/y), but represents an 11.7% improvement q/q. Operating profit is set to be between KRW2.3 trillion and KRW2.5 trillion, a 78% y/y decline at the midpoint, in-line with expectations at the time (Bloomberg: -77.8%). On a q/q basis this represents a four-fold improvement. The global semiconductor industry appears to be now past a cyclical bottom, with further improvements expected going forward.

Economics Weekly – 2023 MTBPS preview: challenged fiscal outlook

On 1 November 2023, the Minister of Finance, Enoch Godongwana, will deliver the 2023 Medium Term Budget Policy Statement (MTBPS), providing an update of the medium-term fiscal framework. The 2023 Budget in February noted that major risks to the fiscal outlook were clustered around low (or no) economic growth which has implications for tax revenue and borrowing costs – especially in an environment of high interest rates and spending pressures from the wage bill, social relief of distress (SDR) grant, and SOEs. Some of these risks have materialised and, while the fiscal framework is materially challenged, we expect the fiscal authority to commit further to consolidation. Here, we review year-to-date (YTD) fiscal developments and implications for fiscal projections. – FNB

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