Weekly Outlook: Barclays and Unilever to release Q3 results

Key events for UK wealth managers for the week starting 23 October

Barclays boss faces fine over whistleblowing scandal


Monday 23 October

  • Trading statement from Shanta Gold
  • In Europe, quarterly results from UniCredit, Sandvik and Philips

Tuesday 24 October

  • Full-year results from Softcat
  • Trading statement from Bunzl and Anglo American
  • UK unemployment
  • Flash purchasing managers indices from Japan, Asia, the EU, UK and the US
  • In Asia, quarterly results from CNOOC and L’Occitane
  • In Europe, quarterly results from Hermès, Novartis, Kering, Orange, Michelin, ASM International, UPM-Kymmene, Norsk Hydro, Randstad, Stora-Enso and Puma
  • In the US, quarterly results from Microsoft, Alphabet, Visa, Coca-Cola, Danaher, Verizon Communications, Texas Instruments, General Electric, Raytheon, General Motors, 3M, Kimberly-Clark, Archer Daniels Midland, Halliburton, CoStar, Spotify and Snap
  • Barclays Q3 results

Barclays will announce its third-quarter results on Tuesday.

The bank is expected by analysts to hit a pre-tax profit of £2bn for the quarter, which would be in line with the second quarter and the third quarter of 2022.

AJ Bell investment director Russ Mould and head of financial analysis Danni Hewson said that while Barclays shares have hit a wide range over the past year, they have been able to maintain positive figures as a whole.

“Overall they have eked out a very modest gain, despite worries over the mortgage market, the UK economy more widely, and also how the investment bank is doing, amid a dearth of real new flotation or merger and acquisition activity,” Mould and Hewson said.

As results are released, Mould and Hewson said they will be keeping an eye on four main factors, namely loan and deposit growth, net interest margin, loan provisions, and the investment bank.

“Loan growth has slowed right down in the past few quarters, in the face of higher interest rates,” Mould and Hewson said.

“Deposits shrank year-on-year in the last quarter, the first such drop since Q4 2018. Whether this is a harbinger of consumers and corporates drawing down liquidity as times get tougher remains to be seen.”

While net interest margins hit 3.22% for the second quarter, members of management for Barclays have signified this is unlikely to hold over the rest of the fiscal year. The bank suggests a net interest rate of 3.15% for 2023 as a whole.

Mould and Hewson said that loan losses have started to increase from the historic lows they were hitting.

“The second quarter’s impairment charge of £372 million represented a loan loss ratio of 0.37% and took the first half total to £896 million or 0.44%,” Mould and Hewson said.

“Chief executive C.S. Venkatakrishnan and chief financial officer Anna Cross have guided to a loan loss ratio of 0.5% to 0.6% for 2023 overall, so a further increase in loan impairments is possible in the second half.”

The investment bank is predicted by analysts to outperform last year’s pre-tax profit, estimating £4.8bn for the year compared to £4.3bn in 2022. The quarter benchmark sits at £1.2bn.

Wednesday 25 October

  • Full-year results from ASOS
  • Trading statements from Reckitt Benckiser, Lloyds, Fresnillo and Ibstock
  • German Ifo economic sentiment survey
  • US new home sales
  • US oil inventories
  • Monetary policy decision from the Bank of Canada
  • In Europe, quarterly results from Porsche, Air Liquide, Atlas Copco, Banco Santander, Heineken, Dassault Systèmes, Beiersdorf, Kone, Deutsche Bank, Carrefour, Akzo Nobel and SSAB
  • In the US, quarterly results from Meta Platforms, T-Mobile US, Boeing, IBM, KLA Corp., General Dynamics, Hess, Baker Hughes, United Rentals, Teradyne and Mattel

Thursday 26 October

  • First-half results from C&C Group
  • Trading statements from Standard Chartered, Renishaw, Alumasc, Bloomsbury Publishing, Inchcape and Hunting
  • German retail sales
  • US durable goods orders
  • US pending home sales
  • US weekly initial unemployment claims
  • In Australia, quarterly results from Newcrest Mining
  • In Japan, quarterly results from Takeda, Renasas, Canon and Fujitsu
  • In Asia, quarterly results from SK-Hynix, APAC Budweiser Brewing and Hyundai Motor
  • In Europe, quarterly results from TotalEnergies, Schneider, Volkswagen, Mercedes-Benz, BNP Paribas, Universal Music, ST Microelectronics, Danone, Saint Gobain, Repsol, Moncler, Volvo Car, Accor, Saab, BE Semiconductor, HelloFresh and Aixtron
  • In the US, quarterly results from Amazon, Mastercard, Merck, Comcast, Linde, Intel, UPS, Bristol-Meyers Squibb, Ford, Honeywell, Northrop Grumman, Altria, Keurig-Dr. Pepper, Hershey, Newmont, Royal Caribbean Cruises, Southwest Airlines, Juniper Networks, Hasbro, US Steel and Harley Davidson
  • Unilever third-quarter results

Unilever will also share its third-quarter results on Thursday as the company adjusts to the leadership of CEO Hein Schumacher.

“For all of the noise about food groups ‘profiteering’ from inflation, shares in Unilever are unchanged over the past twelve months, even if one of the foundations for any investment case for the stock is the pricing power conferred by its powerful brands,” Mould and Hewson said.

Attention in the results will lie within the restructuring plan for the company as it adjusts to new benchmarks put in place by Schumacher and continues a share buyback programme.

The keys for Schumacher include some improvements in group operating margin as the company aims for 20%, long-term revenue growth above the top end of its 3-5% target range, and a moderation in price growth. In the first half of the fiscal year, price growth hit 9.4%.

“That easing in price growth would suggest that even Unilever’s pricing power has its limits, which makes sense given the 0.2% drop in underlying volumes in the first half and the statement that 41% of brands were winning market share (which tacitly admits that 59% were holding or losing it),” Hewson and Mould added.

As the results are revealed, analysts will key in to the headline sales figure, expected to be €15.2bn (£13.27bn), an increase in prices of around 5.1%, and its cash returns. Unilever is amidst a share buyback totalling €3bn (£2.62bn) and is expected to complete its final tranche of €750m (£654.6m) by the end of the year.

“Analysts and shareholders will also look to the dividend,” Hewson and Mould said.

“The analysts’ consensus is for a total payment in 2023 of €1.74 (£1.52) which implies a slight acceleration in the run rate in the second half.”

Friday 27 October

  • Trading statements from International Consolidated Airlines and NatWest
  • US Personal Consumption Expenditure (PCE) index
  • In Japan, quarterly results from Hitachi
  • In Asia, quarterly results from LG Electronics
  • In Europe, quarterly results from Equinor, Safran, ENI, Holcim and Air France-KLM
  • In the US, quarterly results from Chevron, AbbVie and Lyondell-Basell

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