Animals both alive and dead will be on the market’s menu on Tuesday as mid-cap retailer Pets at Home Group PLC (LON:PETS) and meat processor Cranswick PLC (LON:CWK) report results that could put FTSE 100 groups Compass Group PLC (LON:CPG) and Pennon Group PLC (LON:PNN) in the shade.
Of the four companies, the pet products and services chain it is expected to see the strongest sales growth.
Pet shops were one of those sub-sectors of retail that were deemed essential and allowed to trade during the lockdown, although the extra safety measures because of the pandemic are likely to weigh on margins.
According to broker Peel Hunt, Pets at Home is in great shape and the strong momentum is expected to have continued into the recent weeks.
With the shares up 45% since the start of the year, can the company live up to expectations?
Will lockdowns provide another boost for Cranswick?
Fellow FTSE 250-listed company Cranswick in August raised its outlook after enjoying strong sales in its first quarter, albeit during which safety measures at its meat factories were criticised after three workers died from coronavirus (COVID-19).
The meat processor said all its sites remained fully operational with the “enhanced safety measures” that it had introduced in March, which enabled it to meet increased levels of demand from the retail sector as the country went into lockdown.
However, after remaining fully operational, nine workers out of Cranswick’s 1,200-strong workforce at its Wombwell factory in Barnsley, South Yorkshire tested positive for COVID-19 and three subsequently died.
First-half sales are expected to increase 21%, predicted broker Peel Hunt with the second quarter growth of around 15% slowing from the 24.8% growth in the first due to lower contribution from contract wins and acquisitions as well as the easing of lockdown.
The tightening of restrictions in October and England’s lockdown in November will ensure continued strong growth through food retailers as more people work from home and home cook, Peel Hunt analysts said, though Covid outbreaks in Norfolk and self-suspension of exports to China is likely to result in forecasts remaining unaltered.
Compass direction still likely to be cloudy
Cooked meats are more the thing for catering colossus Compass, which reports full-year results on Tuesday after an upbeat pre-close update a few weeks ago.
At the end of September the group said it was back to break even again following the reopening of many of its customers’ premises, such as canteens in school, hospitals and businesses, though most sports and leisure sites remain closed in Europe and North America.
However, with the prospect of more lockdowns not confirmed at the time, management acknowledged that further recovery in margins and revenues was unclear and it also took a GBP100mln impairment charge after an audit of contracts.
Analysts have forecast a big drop in pre-tax profit to GBP459mln from GBP1.5bn a year ago, which is seen rising to around GBP800mln for the new year along with a return to the dividend list.
The shares rallied to around 1,450p after the recent spate of positive vaccine news, before some of the new-found confidence ebbed away with some analysts saying investors had got ahead of themselves as “permanent scarring” from working from home could be a potential headwind for the company.
Glass half full?
Pennon Group PLC (LON:PNN) will be the first of a trio of water companies to deliver interim results.
A trading update in September revealed the owner of South West Water was on track to deliver results in line with management expectations, although it did also confirm a GBP10mln hit to its revenues from the coronavirus pandemic.
Pennon in June pledged to grow its dividend at 2% above inflation over the next five years, so investors pretty much know what to expect in that regard.
With that in mind, the outlook statement is likely to be the key area of interest with more lockdown measures being brought in since the end of the firm’s half-year.
Significant announcement expected on Tuesday November 24:
Interims: Cranswick PLC (LON:CWK), Pets at Home Group PLC (LON:PETS), Pennon Group PLC (LON:PNN), AO World PLC (LON:AO.), CML Microsystems Plc (LON:CML), Eckoh PLC (LON:ECK), IG Design Group PLC (LON:IGR), Record PLC (LON:REC), Severfield PLC (LON:SFR), Trifast PLC (LON:TRI)