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BAE Systems, Anglo American and Primark owner Associated British Foods set for Thursday’s spotlight


BAE Systems PLC (LON:BA.) held its sales and cashflow guidance steady for 2020, according to its trading statement in November, when the aerospace group nudged up guidance for underlying earnings per share.

In its finals on Thursday, there will be much more flesh to add the bare bones of its last update, including on management’s indication that order intake expectations was ahead of pre-coronavirus pandemic planning for the year.

Investors will be looking for updates on the company’s order backlog, as well as whether the Eurofighter consortium member is expecting any specific benefit from the UK’s planned £16.5bn increase to its military budget over the next four years.

When is Primark reopening?

Also on Thursday, Associated British Foods PLC (LON:ABF) will be dropping a trading update that may contain news on its shop reopenings after Boris Johnson’s big announcement at the start of the week.

The FTSE 100 group said last month it will lose £1.05bn if the Primark stores currently closed remain shuttered until the financial half-year end on February 27. As a result, the adjusted operating profit for the fast fashion retailer in the first half is forecast to be broadly break-even, compared to £441mln for the same period last year.

Under the scenario that the entire estate is closed imminently, and remains closed until the end of March, the further loss of Primark sales would amount to £800mln, with a consequent hit on profits of £300mln.

The budget clothier doesn’t have an online presence so it can’t offset the losses caused by store closures, though it has a loyal fan base that is willing to hold on their purchases until shops reopen.

“While Primark’s struggles have made headlines, ABF’s food business has enjoyed quiet success with bumper results in the third quarter,” analysts at Hargreaves Lansdown said. “The Grocery division benefited from increased sales over lockdown as consumers have eaten more at home and a cyclical upturn in sugar prices is good news for the sizeable Sugar business.”

Anglo American to post big second-half rebound

Anglo American PLC (LON:AAL) will also be announcing final results on a busy Thursday, a week after big rivals BHP, Glencore and Rio Tinto. The diversified miner’s shares have risen 40% over the past year, despite a horrible set of interim results, which showed a sharp drop in profits, drops in production and a dividend cut.

Numbers should be looking up now, with higher commodity prices as lockdowns also become less impactful in South Africa.

The market expects underlying earnings (EBITDA) for the De Beers owner to come in at US$9.4bn, down from US$10bn a year ago though it still implies a second-half rebound after reporting US$3.4bn EBITDA in the first half.

“Bumper dividend pay-outs from BHP and Rio Tinto and a return to the dividend list from Glencore have set the mining sector on its way to be the largest individual paying sector within the FTSE 100 in 2021 (and possibly even 2020, depending upon what the banks declare) and Anglo-American will be the next big digger to set up to the plate,” analysts at AJ Bell said.

Based on Anglo’s policy of paying out 40% of net profits in dividends, a second-half distribution of around US$0.65 a share would be expected, taking the full-year total to US$0.93.

Thursday February 25

Trading announcements: Associated British Foods PLC (LON:ABF)

Finals: Anglo American PLC (LON:AAL), BAE Systems PLC (LON:BA.), Centrica PLC (LON:CNA), Evraz PLC (LON:EVR), Hikma Pharmaceuticals PLC (LON:HIK), Mondi PLC (LON:MNDI), St. James’s Place PLC (LON:STJ), Standard Chartered PLC (LON:STAN), Aston Martin Lagonda Global Holdings PLC (LON:AML), Drax Group PLC (LON:DRX), Grafton Group PLC (LON:GFTU), Howden Joinery Group PLC (LON:HWDN), Impax Environmental Markets PLC (LON:IEM), Inchcape PLC (LON:INCH), John Menzies PLC (LON:MNZS), KAZ Minerals PLC (LON:KAZ), Morgan Sindall Group PLC (LON:MGNS), National Express Group PLC (LON:NEX), Serco Group PLC (LON:SRP), Spectris PLC (LON:SXS), Vistry Group PLC (LON:VTY)

Interims: Genus PLC (LON:GNS), Dotdigital Group PLC (LON:DOTD), Cap-XX Ltd (LON:CPX), Ricardo PLC (LON:RCDO)

FTSE 100 ex-dividends to knock 12.76 points off the index: Diageo PLC (LON:DGE), Land Securities Group PLC (LON:LAND), Unilever PLC (LON:ULVR), AstraZeneca PLC (LON:AZN)

Economic data: US GDP, US jobless claims, US durable goods orders

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