THIS WEEK JULY 24th
Results: Ryanair Holdings, Alphabet, Christian Dior, Halliburton, Hasbro, Hyundai
Indicators: Euro zone composite, manufacturing and services PMI flash (Jul); German composite, manufacturing and services PMI flash (Jul); US manufacturing PMI flash (Jul), home sales (Jun)
Meetings: Cranswick AGM (Hull)
As Ryanair prepares to post results on Monday, the main variable in its full year’s performance is expected to come down to yields alone.
Average profit forecasts for Q1 are €366 million while the budget carrier gave a full year’s guidance of between €1.4 billion and €1.45 billion.
Fuel costs are down and ancillaries are flat, while prices are expected to have the biggest overall influence on performance – Ryanair said yields could fall by 5 per cent in H1 and by 8 per cent in H2.
Stephen Furlong, transport and logistics analyst at Davy, says Q1 results are expected to be particularly strong given the period incorporated Easter, itself a boost of about €30 million in revenues. Davy is forecasting €339.3 million in profits.
“I would expect them to remain somewhat cautious about price and it could be quite negative,” he said ahead of Monday’s results.
“I think prices are still falling. I think they will have a fantastic Q1 but I think they will be cautious [on guidance]. I think Q2 will also be strong but not as strong.”
Meanwhile, investors will also be keeping an eye on the fate of Alitalia and the potential for a fare war in the event of its failure.
Results: AT&T, Caterpillar, Chubb, Dominos, General Motors, Goodyear, JetBlue Airways, Kia Motors, McDonald's, Mitsubishi Motors, Mondelez International, Nintendo
Indicators: UK business optimism index (Q3), industrial trends orders (Jul); German business climate, current conditions and expectations (Jul); US house price index (May), consumer confidence (Jul), manufacturing index (Jul)
Meetings: Hibernia REIT agm (Marker Hotel, Grand Canal Square, Docklands, Dublin 2); Icon agm (South County Business Park, Leopardstown)
Results: Permanent TSB, Tullow Oil, GlaxoSmithKline, Anheuser-Busch InBev, BASF, Bayer, Boeing, Canon, Coca-Cola, Daimler, Deutsche Börse, Facebook, Ford, Hilton Worldwide, JC Decaux, Lloyds Banking Group, Nestle, PayPal, Peugeot, Puma, Royal Dutch Shell, Vertex Pharmaceuticals
Indicators: Irish overseas travel (CSO); UK GDP growth rate (Q2), mortgage approvals (Jun); US mortgage applications (Jul), composite and services PMI flash (Jul), home sales (Jun)
Meetings: US Fed interest rate decision
With the main Irish banks reporting earnings this week (Permanent TSB Wednesday, AIB Thursday, Bank of Ireland Friday) the focus will be on the sterling devaluation impact on loan book and profitability, loan growth at home in Ireland and potential European regulatory pressure on non-performing loan (NPL) ratios.
Sterling’s impact poses the greatest threat to Bank of Ireland, which generates 20 per cent of net income in the UK, compared to about 11 per cent at AIB.
Loan books have been contracting steadily since 2008. A return to growth had been anticipated by the end of last year before sterling fell, but considerable growth is expected over the coming two to three years, explains Darren McKinley, Merrion’s senior Irish equity analyst.
“Growth in banks net loan book will be the key driver of earnings growth from here,” he says.
“We have seen a surge of first-time buyer demand for houses and everyone is assuming that will lead to strong growth in Irish mortgage demand.”
NPLs are also a major focus point and, says McKinley, a question arising next week will be “can they sustain the pace of decline that they have seen in the last two years? I don’t think the investors are anticipating this, so they have capacity to surprise positively here.”
There has been consolidation recently in the Italian banking system with the ECB putting pressure on Italian banks to sell off NPL assets. Some believe there may be pressure from the ECB for other European banks to reduce their own ratios. If that is the case, AIB and Permanent TSB will likely face questions from analysts, given that their NPL ratios are over 15 per cent and higher than industry norms.
For Bank of Ireland, there will also be keen interest around the 2 per cent dividend yield anticipated in March payable against FY 2017.
Merrion currently have a "buy" rating on Bank of Ireland with 20 per cent upside over 12 months, and on Permanent TSB with 25 per cent upside over 12 months. Given the higher valuation at Allied Irish Banks – Merrion rate it as a "hold".
Results: AIB (half year), Alexion Pharmaceuticals, Boston Scientific, Bristol-Myers Squibb, Diageo, Intel, Amazon, Air France-KLM, Airbus, BNP Paribas, Barclays, Credit Suisse Group, Danone, Deutsche Bank, Electronic Arts, Fiat Chrysler, L'Oriél, Mastercard, New York Times, Nissan, Procter & Gamble, Renault, Samsung Electronics, Sharp, Singapore Airlines, Starbucks, Sky, Statoil, Telefonica, Twitter, UPS, Volkswagen, Xerox.
Indicators: UK consumer confidence (Jul); German consumer confidence (Aug); US jobless claims (Jul)
Meetings: Business energy use survey (CSO release); Amplify Digital Marketing Conference (Clayton Hotel Silver Springs, Cork)
Results: Bank of Ireland, Audi, Banco Santander, Exxon Mobil
Indicators: Irish retail sales index (CSO); Euro zone business confidence (Jul), services sentiment (Jul), consumer confidence (Jul), economic and industrial sentiment (Jul); German import prices (Jun); inflation (Jul); US GDP growth (Q2)