16 - 20 February 2015
A regular look at local and international economic data, major events, economic releases and company news expected in the week to come.
By Shaun Murison, Market Analyst
After a guest appearance in last week’s top decliners list, Woolworths has returned to its winning ways, following the release of the company’s interim results. The share price has now returned to and marginally exceeded the all-time highs realised after the trading statement had forewarned of the positive results to come. The “recent” acquisition of Australian retailer, David Jones, has provided a meaningful boost to company turnover, although the material benefit from synergies relating to the acquisition (such as the inclusion of Country Road brands in David Jones outlets) is still to be realised towards the end of the second half of Woolworths’ financial year. Some of the salient features of the company’s interim results include a 55.2% increase in turnover and adjusted headline earnings growth (excludes David Jones acquisition costs) of 29.3%. The return on average equity has reduced in the short term to 30% and the 96.5c interim dividend has been maintained.
Sanlam has continued to gain in the week gone by after Santam (of which Sanlam has a 57% ownership) released a positive trading update. Improved underwriting and the absence of hail related claims (as in the previous year’s Q4) sees Santam now expecting headline earnings per share, for the year ending 2014, to increase by between 35% and 45% per share.
Anglo American PLC has rebounded in the week despite weaker earnings reported for the full year. Subsidiaries Kumba Iron Ore and Amplats forewarned of the drop in earnings to come, as the company’s themselves reported a decline in earnings (of 29% and 49% respectively) at the beginning of the week. Anglo American Plc did however manage to improve operational efficiencies over the year which helped curb the impact of the dramatic fall in underlying commodity prices, resulting in underlying earnings falling less than what was expected.
Tigerbrands is this week’s worst performer in the “Blue Chip” category following the release of the company’s first quarter trading statement. Turnover increased by 7% when compared to the prior year’s comparative reporting period. The Dangote Flour Mills operation in Nigeria has provided a drag on revenue growth as improved efficiencies have been offset by the rapid depreciation of the Naira. The Nigerian currency (Naira) has suffered in sympathy with the decline in oil, a key commodity export for the country.
|18-Feb||City Lodge Hotels||Interim results|
|19-Feb||RCL Foods||Interim results|
|19-Feb||Sibanye Gold||Full Year Results|
|20-Feb||Northam Platinum||Interim results|
Global commitments to stimulating economic growth have once again been reaffirmed, as the Royal Bank of Australia (RBA) cut lending rates by a further 25 basis points this week and the Peoples Bank of China (PBOC) reduced the reserve requirement ratio in an attempt to boost lending. The move follows the current central bank trend in global markets which is to further ease or maintain accommodative monetary policy, as slowing growth and deflationary fears remain prevalent.
In Europe, the European Central Bank (ECB) announced that it would no longer accept Greek sovereign debt as collateral going forward. The ECB did however follow this up by saying that it would help provide the country’s banks with up to EUR60bn of emergency funding if needed.
In the U.S., non-farm payroll data showed that 257 000 people were added to the payroll in January 2015, while the unemployment rate worsened slightly to 5.7% the participation rate of those actively seeking employment remained low at 62.9%.
In what has been a quiet week domestically on both the economic and earnings front, our market has been quite buoyant following improved commodity prices and further global monetary easing. The manufacturing Purchasing Managers’ Index (PMI) for January alluded to industrial growth higher than what was expected, with an index reading of 54.20 (est. 50.1). The figure was also ahead of December’s reading of 50.20.
The business confidence index reading for January was slightly better than the previous months reading, coming in at 89.30, although still reflecting a hampered business sentiment. The South African Reserve Bank (SARB) reported net gold and foreign exchange reserves to have dropped to $42.145bn in January from $42.727bn in December 2014.
The week ahead
The new week will see the release of December 2014’s local mining and manufacturing production data in which investors will be hoping to see a move back into growth in both departments from the previous months reported contraction. The South African president is also set to release his state of the nation address on Thursday.
The week will end with further evidence over the health of the European economy as Gross Domestic Product (GDP) data is scheduled for release from Germany, France, Italy and the Eurozone.
|17-Feb||11:30 am||UK||Consumer Price Index (CPI) y/y||0.50%|
|17-Feb||12:00pm||EU||German ZEW Economic Sentiment||48.40|
|18-Feb||10:00am||SA||Consumer Price Index (CPI) y/y||4.99%||
|18-Feb||10:00am||SA||Consumer Price Index (CPI) m/m||0,13%||-0.20%|
|18-Feb||13:00pm||SA||Retail Trade Sales y/y||2.25%||2.60%|
|18-Feb||13:00pm||SA||Retail Trade Sales m/m||0.62%||1.50%|
|18-Feb||11:30am||UK||Jobless Claims y/y||-||29700.00|
|18-Feb||09:00pm||US||FOMC Meeting minutes||-||-|
|19-Feb||03:30pm||US||Weekly Jobless Claims||-||304000|
|19-Feb||05:00pm||US||Philly Fed Manufacturing index||-||6.30|
|20-Feb||10:00am||EU||French Flash Manufacturing PMI||-||49.20|
|20-Feb||10:30am||EU||German Flash Manufacturing PMI||-||50.90|
|20-Feb||11:30am||UK||Retail Sales m/m||-||0.40%|
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|25 February||18:30||Premier Hotel Regent, East London||1.5hrs|
|26 February||18:30||Radisson Blu, Port Elizabeth|
|10 March||18:30||Redlands Hotel, Pietermaritzburg||1.5hrs|
|11 March||18:30||Southern Sun Elangeni & Maharani, Durban||1.5hrs|
|1 April||18:30||Southern Sun, Bloemfontein||1.5hrs|
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Source: INET BFA, as of 13/02/2015