Next week on the stock market

Among FTSE 100, FTSE 250 and selected other companies scheduled to report next week:

• AG Barr will tell us how hard the lockdowns hit profits
• Will United Utilities reinstate the dividend?
• A long awaited update from Cineworld

FTSE 100, FTSE 250 and selected other stocks scheduled to report next week

21-Sep
Avon Rubber	Pre-Close Trading Update
Informa	Half Year Results

22-Sep
A.G. Barr*	Half Year Results
Close Brothers Group	Preliminary Full Year Results
Kingfisher	Half Year Results
TUI	Pre-Close Trading Update

23-Sep
SSP	Q4 Trading Statement

24-Sep
Cineworld	Half Year Results
Go-Ahead Group	Full Year Results
Smiths Group	Full Year Results
United Utilities*	Pre-Close Trading Statement

25-Sep
Pennon *	Trading Statement
PZ Cusson	AGM Trading Statement

*Companies on which we will be writing research

AG Barr

There are two main things to focus on in AG Barr’s results next week. The first is the group’s actual trading, and we’ve been told to expect revenue declines of about 8% overall to c.£113m. AG Barr is a little different to some of its competitors as it has relatively little exposure to bars and restaurants. Instead, the group generates a lot of sales from impulse purchases, which fell during lockdowns. How the revenue drop impacts profits is less clear, but we suspect the hit will be disproportionate.

The other big thing to watch out for will be the cancellation of the Rockstar contract. When Pepsi bought Rockstar they cancelled AG Barr’s distribution contract, which will blow an estimated 8% hole in revenue. The group will have to take some non-cash charges to reflect the loss, but will also get some compensation payments. We’ll have to wait and see what the eventual impact is.

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United Utilities

As a regulated business United Utilities (UU) can’t offer investors dazzling capital growth, but it could offer a relatively predictable dividend. As things stand UU’s dividend policy is TBC, so we’re hoping for an update next week.

The group had announced plans to grow the dividend for the next 5 years in line with inflation. But as the pandemic unfolded management took a rain check.

UU makes its money supplying water to households, which should mean first half revenues are relatively resilient. However, UU and peers recognise the current pressure on household finances, and expect more customers to struggle with their bills - even more so among business customers.

The dividend decision likely rides on a few factors, including the level of customers failing to pay bills and the additional cost to serve customers. Both are ongoing issues, so we’re keen to hear what the outlook for the rest of the year is.

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Cineworld

“What hasn’t happened?” is an appropriate question when considering Cineworld’s first half.

Lockdowns saw the group’s 787 cinemas close, threatening to make the group’s already significant debts look unmanageable. And that’s before taking into account the planned $2.3bn debt funded acquisition of Canadian cinema chain - Cineplex. Thankfully the group’s lenders agreed to ease borrowing restrictions, and the Cineplex deal’s fallen through – further good news for liquidity but bad for the legal teams. The two cinemas are now head to head in litigation proceedings.

While we welcome an update here, our attention will be focussed on how Cineworld sees its future. Attendance was already in decline pre pandemic and, with additional revenue (cinema treats and advertising) making up just over 40% of the total last year, a lot is riding on people still choosing the cinema as a destination.

Blockbusters are where cinemas make most of their money, but that could be set to change. Disney’s Mulan is the first blockbuster to bypass cinemas and go straight to streaming. Meanwhile the US’ largest cinema chain AMC has entered into a new agreement with Universal, that will see blockbusters spend just 17 days (previously around 75) exclusive to cinemas - in exchange AMC will receive a cut of Universal’s pay per view revenue. We’ll be on the lookout for any comments on this model from Cineworld next week.

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Unless otherwise stated estimates are a consensus of analyst forecasts provided by Thomson Reuters. These estimates are not a reliable indicator of future performance. Past performance is not a guide to the future. Investments and income they produce can rise and fall in value so investors could make a loss.

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