Weekly Outlook: Severn Trent and Centrica results

Key events for UK wealth managers for the week starting 12 February

London millennium bridge City St Pauls


Monday 12 February

  • US monthly Federal budget deficit
  • In Europe, quarterly results from Michelin
  • In the US, quarterly results from Lattice Semiconductor and AvisBudget

Tuesday 13 February

  • UK unemployment, wages and jobs data
  • German ZEW economic sentiment survey
  • US inflation
  • US NFIB smaller companies survey
  • In Japan, quarterly results from Japan Tobacco
  • In Europe, quarterly results from Randstad
  • In the US, quarterly results from Coca-Cola, Shopify, Airbnb, Zoetis, AIG, GlobalFoundries, MGM Resorts, Zillow, Molson Coors, Robinhood Markets, Hasbro and Lyft

Wednesday 14 February

  • Full-year results from Coca-Cola Hellenic Bottling
  • First-half results from Dunelm
  • Trading update from United Utilities
  • UK inflation
  • EU Q4 GDP growth
  • US oil inventories
  • In Japan, quarterly results from Sony, Rakuten and Dentsu
  • In Asia, quarterly results from Baidu
  • In Europe, quarterly results from EssilorLuxxotica, Heineken, CapGemini, AholdDelhaize, Schindler, ABN Amro, Norsk Hydro, Telecom Italia and Thyssen Krupp
  • In the US, quarterly results from Cisco, Analog Devices, Occidental Petroleum and Kraft Heinz
  • Severn Trent third-quarter trading statement

Severn Trent will release its third-quarter trading statement on Wednesday following a year of slowly falling share prices.

Russ Mould, AJ Bell investment director, Danni Hewson, AJ Bell head of financial analysis, and Dan Coatsworth, AJ Bell investment analyst, said: “Generally, investors warm to utilities for the relatively predictable demand for their services in oligopolised (if tightly regulated) markets, their degree of insensitivity to the economic cycle and stable cash flows, which can turn into juicy dividend yields.

“In reality, utilities need to offer a decent yield as compensation to shareholders for the risks involved, given that earnings growth is likely to be fairly modest over time.”

To March 2024, the dividend yield for Severn Trent is 4.7%, above the FTSE 100.

For the third-quarter results, expectations are set for an increase in sales in the regulated and waste water businesses, increased operating costs, and a drop in tax rate that analysts expect will result in pre-tax profit of £238m for the fiscal year to March. Last year, this hit £168m while 2022 was above £250m.

Thursday 15 February

  • Full-year results from RELX
  • First-half results from MJ Gleeson
  • Trading updates from EnQuest
  • UK Q4 GDP growth
  • UK industrial, manufacturing and construction output
  • US retail sales
  • US NAHB housebuilding industry survey
  • US weekly initial unemployment claims
  • In Australia, quarterly results from Telstra
  • In Europe, quarterly results from Airbus, Schneider, Safran, Stellantis, Pernod Ricard, Orange, Commerzbank, Renault and La Française des Jeux
  • In the USA, quarterly results from Applied Materials, Deere, DoorDash, Coinbase Global, DraftKings, Dropbox, Liberty Global, Wendy’s and ShakeShack
  • Centrica full-year results

Centrica will share its full-year results this Thursday after shares have started to slide from the 170p hit in Autumn 2023.

“As with other utility stocks, the slower-than-expected rate cuts and absence of a recession could be a factor, while Centrica shareholders will also be taking note of lower oil and gas prices, as well as the prospect of lower energy price caps,” Mould, Hewson, and Coatsworth said.

Analysts expect flat sales for the year at £33bn and an adjusted operating profit of £2.5bn.

“Although it is best known for British Gas – a business that is benefiting from the collapse of many of its competitors – Centrica has many other strings to its bow, including its oil and gas exploration and production operations in the North Sea, stakes in British nuclear power plants, energy trading, renewable power generation, energy storage and onsite energy generation via solar cells and heat pumps,” AJ Bell’s team said.

“The firm’s presence in the wholesale power markets left it better placed to withstand some of 2022’s wild swings in pricing that did for many of its rivals in the business of domestic supply.”

For the year ahead, operating profit is expected to drop again to near £1.7bn as energy prices fall. Dividends, however, sit at 4.00p per share for 2023 and 4.64p for 2024, up from 2022’s 3p.

Friday 16 February

  • Full-year results from SEGRO
  • UK retail sales
  • US producer price inflation
  • US housing permits
  • US housing starts
  • In Asia, quarterly results from Sands China
  • In Europe, quarterly results from EdF, ENI, SwissRe and Norwegian Air Shuttle
  • In the US, quarterly results from Liberty Broadband