Tuesday preview: Galliford update eyed as Halfords aims to stay on track

Although quieter than last week, there's still plenty for investors to get their teeth into on Tuesday, with updates from Close Brothers, Cranswick, Entertainment One, Galliford Try, Halfords, Homeserve, Pets at Home and Shaftesbury, before later data on UK public finance data and industrial trends that could move markets a little.

Halfords' results will mark four months since new chief executive Graham Stapleton joined from Dixons Carphone to become the bike and car parts retailer's fourth boss in six years.

Following nine profit warnings in the two years before David Wild left in 2012, Matt Davies got the turnaround into first gear with his Moving Up A Gear strategy before leaving for Tesco, with Jill McDonald then leaping into the saddle in 2015 before dismounting last year for Marks & Spencer.

Stapleton will have chairman Dennis Millard, in charge since 2009, keeping a grip on the handlebars, as the South African said when McDonald left that the new CEO would be given a mandate to implement the existing strategies.

The recent boardroom musical chairs also saw finance director Jonny Mason, who has been in place since 2015 and was interim CEO after McDonald left, give his notice in March, making his way over to Dixons Carphone, funnily enough.

For the year to 31 March, Halfords is expected to produce a £71.4m profit before tax, according to the average City analyst forecast, with earnings per share predicted to slip 4% to 29p, with a dividend of 17.6p per share.

In January, the FTSE 250 group reported a strong third quarter, with revenue up 3.2% and on 2.7% on a like-for-like basis, meaning the 41 weeks to 12 January had seen total revenue up 3.6% and 1.9% on a LFL basis.

"We expect a relatively routine update with the key likely to be any guidance given on recovery in margins due to the rebound in GBP/USD which was a major drag for the last 18 months," said Deutsche Bank.

A small special dividend on top of the regular payout is "possible" given the balance sheet policy and past precedent, but analysts suggested the change in management may mean an extra payout its deferred this time round. DB said there will be a separate, as yet unscheduled, event later in the year at which Stapleton will set-out a longer-term vision for the group.

Looking back, Numis recalled that as margins had been hit by a "meaningful negative mix impact" that was expected to continue into Q4, PBT was guided to be "broadly" in line with market expectations, leading to it cutting its forecast from £74.1m to £71.7m.

"Looking ahead to Q4, as well as the anticipated mix impact, there is also likely to have been an overall negative impact from the snow and cold weather – while Car Maintenance would have benefited, Cycling would have suffered and should be seasonally more significant," analysts wrote.

Galliford Try last week completed its £158m rights issue, with Tuesday's results hopefully confirming the capping off of a difficult 12 months. Around a year ago, the construction group announced a £98m exceptional charge in regards to legacy construction contracts a year ago, most notably relating to the Aberdeen ring road -- or to use it's full title the Aberdeen Western Peripheral Route -- where it was working with Carillion before the latter's collapse.

"Given this backdrop, we believe that investors will primarily focus on any update in regards to the AWPR contract, which we note is due to be completed this summer," said Numis, also expecting the market to look for confirmation that there are no further issues in the construction business.

"Elsewhere, we expect a relatively robust update in regards to housebuilding (similar to peers), although we are cognisant of the poor weather in the first quarter."

Peppa Pig rights owner Entertainment One will be publishing full year results, where the consensus forecast is for EPS of 21.2p after the release of a pre-close trading update in April.

With that statement fairly detailed and pointing to a "strong" underlying earnings performance, with the television and film producer saying momentum in the first half carried on into the second .expected the FY18 results to be in line with expectations.

Since that trading update, the group reported that its Designated Survivor TV show had not been renewed for a third series by US network ABC, although discussions were ongoing with other broadcasters.

West End-focused retail and residential property developer Shaftesbury will release interim results having last updated the market in February where it hailed the "economic strength and resilience" of London's premier shopping and theatre district for its "enduring local, national and global appeal as a destination of choice for people and businesses".

Good progress was being made in its larger developments, which were 52% let or under offer, including Thomas Neal's Warehouse under offer to a single occupier; two of three Central Cross large units and three smaller let or under offer; and discussions under way on retail units fronting Charing Cross Road.

UBS forecasts EPRA net asset value of 981p per share, up 3% over the 953p a year ago, primarily driven by portfolio valuation growth of 2.2% that is behind the 3.0% market data recorded by IPD.

"We forecast operating profit to be largely offset by dividend distribution," UBS analysts said, forecasting gross rental income up 16% to £59.1m and adjusted EPS up 8% to 8.8p and a 7% hike in the dividend to 8.5p.

Among small caps, there may be extra attention on book publisher Bloomsbury, which in March released a trading update which indicated that revenues would be slightly ahead of expectations while profits will be "well ahead". The consensus estimate is for 13.5p of EPS.

Numis forecast PBT of £13.0m and EPS of 13.9p having upgraded forecasts following the encouraging March update; . In March.

MACROECONOMIC NEWS

Public finances will be released 0930 BST, with borrowing on the public sector net borrowing excluding banks measure expected to come out at about £8.5bn, below the £9.2bn from April 2017 due to lower interest payments.

The CBI industrial trends survey at 1100 BST is expected to show the total orders balance to drop to +2 in May, from +4 in April.

Tuesday May 22

UK ECONOMIC ANNOUNCEMENTS

Public Sector Net Borrowing (09:30)
CBI Industrial Trends Survey (11:00)

FINALS

1Spatial, Big Yellow Group, Bloomsbury Publishing, Cranswick, Entertainment One Limited, First Derivatives, Halfords Group, Homeserve, Intermediate Capital Group, JZ Capital Partners Ltd, Nex Group , Pets at Home Group , Scapa Group, Schroder Real Estate Investment Trust Ltd

INTERIMS

Greencore Group, MedicX Fund Ltd., Oxford Biodynamics , Renew Holdings, Shaftesbury, Topps Tiles, UDG Healthcare Public Limited Company, Watkin Jones

TRADING ANNOUNCEMENTS

Close Brothers Group, Galliford Try, Riverstone Energy Limited

Q1

MHP SE GDR (Reg S), Nostrum Oil & Gas

EGMS

Societatea Nationala De Gaze Naturale Romgaz S.A. GDR (Reg S)

AGMS

Accesso Technology Group, Arrow Global Group, Attraqt Group , Avesoro Resources Inc. (DI), Burford Capital , Epwin Group, Fidelity Japanese Values, Foresight VCT, Forterra, Getbusy, Gocompare.com Group, Gulf Marine Services, JSC KazMunaiGaz Exploration Production GDR (Reg S), Marshall Motor Holdings, Menhaden Capital , Riverstone Energy Limited , Royal Dutch Shell 'A', Sherborne Investors (Guernsey) 'B' Limited, Sherborne Investors (Guernsey) C Limited NPV, Stock Spirits Group , Xaar

FINAL DIVIDEND PAYMENT DATE

Aggreko, Holders Technology, Mortgage Advice Bureau (Holdings) , Relx plc