As a short and intense earnings season winds down, Europe’s biggest companies can look back on a quarter of mostly positive results. This week’s lineup may deliver more of the same, at least if the prognoses for Siemens AG and Burberry Plc are anything to go by.
(Bloomberg) — As a short and intense earnings season winds down, Europe’s biggest companies can look back on a quarter of mostly positive results. This week’s lineup may deliver more of the same, at least if the prognoses for Siemens AG and Burberry Plc are anything to go by.
Industrials and consumer products count among the biggest sector gainers on the Stoxx Europe 600 Index this year, and both companies have demand in their favor.
Telecom carriers, meanwhile, have been a mixed bag so far, as Vodafone Group Plc and Africa’s Vodacom Group Ltd. — 65%-owned by the UK powerhouse — release results. But any pessimism that has set in for the sector may prove misplaced as consolidation picks up and the first quarter could prove to be the toughest of the year, on a comparative basis, Bloomberg Intelligence said.
The possibility of more interest rate hikes, as signaled by the Bank of England in the latest round of monetary tightening, is also bearing down on sentiment. That pressured European stocks, including shares of Siemens Energy AG last week, though the company may be less affected by macroeconomic headwinds than by the turbulence at its Gamesa wind-turbine business.
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Highlights to look for this week:
Monday: Siemens Energy’s (ENR GY) upgraded its revenue expectation for the year after strong orders for energy transition technologies, even as its Spanish wind turbine business continues to be problematic and causing the company to forecast a deeper loss. While the situation for Siemens Gamesa remains volatile, Siemens Energy expects an improvement in the second half, although it said this won’t compensate for the unit’s weak first half.
- Vodacom (VOD SJ) slashed its full-year dividend for fiscal 2023, as Africa’s biggest phone operator by value plans investments in new ventures in Egypt, Ethiopia and its fiber business. The company reported headline earnings of 9.48 rand per share for its fiscal 2023, ended in March, and upgraded its medium-term targets for group service revenue growth to mid- to high-single-digit from mid-single digit.
Tuesday: Vodafone’s (VOD LN) full-year results at 7 a.m. UK time give new CEO Margherita Della Valle an opportunity to lay out her vision, which could entail cost cuts and a sustained dividend, BI said. Service revenue growth in the final quarter may prove to be a low point, given the price hikes that kicked in early this year. Those will also help drive next year’s profit outlook, which will rely even more on cost-saving measures. Estimates compiled by Bloomberg indicate adjusted EbitdaaL will fall again this year. Also in focus will be the prospect of a UK mobile merger with CK Hutchison, which reportedly may be unveiled this month. Peer BT is up on Thursday.
Wednesday: Siemens’s (SIE GY) industrial businesses could deliver another set of consensus-beating results for the second quarter, after the company topped estimates last time around and raised its outlook for the year, BI’s Omid Vaziri predicts. Revenue growth and the profit margin at the Digital Industries unit could reach the upper end of guidance after its order backlog climbed to record levels in the first quarter, according to BI. Digital Industries may see 17% revenue growth and an adjusted Ebita margin of 21.3%, consensus shows. Orders for the Mobility segment are expected to almost double, driven by a €3-billion locomotives contract from India. Results are due at 7 a.m. CEST.
Thursday: Chinese demand probably fueled fourth-quarter sales gains for Burberry (BRBY LN), due at 7 a.m. London time. China, which represented about 40% of revenue pre-Covid, is currently running at about 25%, offering plenty of upside as the year progresses, BI’s Deborah Aitken said. With Daniel Lee’s new debut collection hitting stores from September, upholding Burberry’s “Britishness” theme will be crucial. Watch pricing trends and inventory levels for signs shoppers back the brand.
Friday: No major earnings of note
Story Link: Siemens, Burberry May Spring Surprises: EMEA Earnings Week Ahead
–With assistance from Charles Capel, Andrey Biryukov and Renee Bonorchis.
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