GG now spends rainy days trading equities and currencies. He likes to use a combination of technical analysis and news flow to make trading decisions.
Associated British Foods and Apple
It is a busy week on both sides of the Atlantic, particularly in the US with over 160 of the S&P 500 companies set to announce results. Back across the water, Tuesday brings results from Associated British Foods but keep an ear tuned to the Allied Irish Bank AGM.
When ABF last updated the market in February, it commented that strong trading in 3 of its 4 divisions (Agriculture, Grocery and Primark) were offsetting declines in Sugar. As a result, an uplift in profits is expected, with the range £285m-£300m.
ABF’s Grocery division has managed to recover the increase in wheat and other commodities with rises in the price of bread, but an update on commodity price inflation (in particular how rises in soya and other oil prices may have impacted its US oils division) is expected. The value clothing chain Primark (Pennys in Ireland) is expected to have traded well as consumers keep a firm grip of their wallets;like-for-like sales at the half year were up 4%.
The Sugar division is expected to post dreadful results, partly because the EU is reducing the subsidies it pays for sugar production in an attempt to reduce oversupply. Poor weather in South Africa and China will have also adversely impacted the international sugar operations as will higher energy prices used in the refining operations.
On Wednesday keep an eye on the results from Apple due after the close of trading. Recent industry data suggests that the company is leading the pack in PC sales in the US with the Mac having shown strong growth.
Despite a downbeat statement and figures that fell short of expectations in January, some analysts have recently upgraded Apple shares on the back of the PC sales data. PC’s are higher margin than iPods or iPhones and with a couple of analysts suggesting that over 2m Macs were sold in Q1 one can see why they might be keen. Others are more sanguine, citing slower consumer demand for technology (e.g. plasma TV’s and iPods).
Apple may also update the market about its next generation iPhone-whispers are that it maybe launched in June.
The consensus view is for Q1 sales for Apple to come in close to around $7bn, with earnings per share of $1.11.
Enjoyed this post?
April 22nd, 2008 at 10:10 am
ABF posted an adjusted PTP of £285m , close to market estimates. Sugar was, as anticipated pretty grim, with adverse weather and higher processing costs putting the boot into profits.
Grocery performed well on the back of rising bread prices, operating profit moved up by 38%. Primark was probably the stand-out with profits up by 22%. Like-for-like sales continue to run at 4% suggesting that consumers are perhaps ‘trading down’ or at least looking for ‘better value’. Significant increase in the commitment to Spain with 4 more stores opening in H2.
Increasing net debt and working capital increases have slightly marred the figures-stock down 25p or a short 3%.
April 23rd, 2008 at 9:19 pm
Apple said that net income rose by 36% to $1.05bn giving earnings of $1.16 on sales of $7.5bn-far surpassing the best estimates on Wall St.
2.3m Macs were shipped, 10.6m iPods and the company announced the acquisition of PA Semi which may help Apple as they have experience in low end transistors which could be used in the design of future iPhones.
April 24th, 2008 at 9:25 am
But that’s the view in the rear mirror. On the road ahead, they have compressed margins and a quarterly forecast below expectations. Sell.
April 24th, 2008 at 9:36 am
Agree-margins actually declined despite lots more higher margin PC sales-and again they came out with a $1 of earnings for next Q forecast-though Apple are famous for being cautious and then beating estimstes.
Repeat of last quarter where the shares ran up, disappointed with poor outlook statement and raced back down again?
I’m sure that when I was looking at the price at at 1045 last night it was about $156, (down about $7) but my trading platform has no evidence of that today.
Hmmmmm.