Greggs, Ibstock, Legal & General and Berkeley: Results Preview from Hargreaves Lansdown

Analysts at Hargreaves Lansdown tell us what they expect from upcoming trading updates from Greggs, Ibstock, Legal & General and Berkeley.

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Greggs (LON: GRG), Quarter 4 Results, Tuesday 7 March

Matt Britzman, equity analyst, Hargreaves Lansdown:

"Markets have already had a taster on what to expect from full year results, with Greggs’ January trading statement pointing to a strong end to the year. Despite headwinds from bad weather and strikes, momentum continued over the fourth quarter and full year like-for-like sales rose almost 18%. Costs have soared over the year so we’re expecting pretty much all that top line growth to be eaten up, with profits posting a small gain.

"We're expecting material cost inflation to continue into 2023, but remain somewhat optimistic that further rises in staff and food input costs may start to simmer as we lap high base levels. Energy remains an unknown, and the benefit of hedged prices will begin to roll back as we move through the year. That’s unlikely to cause any major disruption to the ongoing plan of rolling out new stores, extending opening hours and pushing the growing online offering.”

Ibstock (LON: IBST), Full Year Results, Wednesday 8 March

Aarin Chiekrie, equity analyst, Hargreaves Lansdown:

"Ibstock manufactures clay and concrete building products, so the group gets paid as long as houses are being built and refurbished. Against a backdrop of a deteriorating outlook for housebuilders, we’re keen to see if next week’s results show any sign of trouble.

"After two guidance upgrades in as many trading statements, Ibstock has been weathering the storm better than expected recently. Input cost inflation has been mostly offset by price increases so far, leading to expectations that full-year revenue will jump around 25% to £510m, even despite a fall in fourth quarter sales volumes.

"Management’s also spent much of the last year shoring up the balance sheet, putting the group in a much stronger financial position. But demands on cash are not insignificant – rising investment in brick factories, share buybacks and dividend payments to name a few.

"And as interest rates rise and inflation lingers in double digits, the recent fall in construction activity could spell trouble for the materials-maker. Next week’s detailed full-year results should give us a better idea of how the balance sheet’s holding up.”

Legal & General (LON: LGEN), Full Year Results, Wednesday 8 March

Steve Clayton, head of equity funds, Hargreaves Lansdown:

"These could be a complex set of numbers. New accounting rules for insurers will see big changes to reported incomes, with firms facing cuts of as much as 25%. But this is accounting shenanigans and the cash flows of the businesses are unchanged. For their part, L&G have said they intend to grow the dividend out to 2024 regardless.

"Accounting bangs and flashes aside, the increase in bond yields is creating an unprecedented opportunity for insurers to grow their Pension Risk Transfer operations and we expect L&G to paint a confident picture here.

"The macro outlook matters. L&G have big holdings of corporate bonds on their books and they own CALA Homes, where asset values could be shaky. But they start from a position of capital strength and we do not expect any significant changes in the group’s messaging to investors."

Berkeley Group Holdings (LON: BKG), Trading Statement, Friday 10 March

Aarin Chiekrie, equity analyst, Hargreaves Lansdown:

"Berkeley’s performance has held up relatively well given the vast number of challenges the sector is facing. We’re keen to hear how things are progressing in next week’s trading update.

"In its half year results, which covered 6 months of trading to the end of October 2022, reservation rates were 2% ahead of the same period last year. And forward sales, which reflect sales due to complete within the next three years, also rose 7% to £2.3bn.

"But we’ve seen signs that the foundations may be beginning to show some weakness. Compared to the first 5 months, trading was down around 25% during the last five weeks of this period, reflecting the challenging environment housebuilders find themselves in. Recession fears, double-digit inflation and rising interest rates are a potent mix, one which has been tough for buyers to stomach.

"The group’s higher-end, London focus means it offers something different to other large builders. But that doesn’t mean they’re immune to wider trends. We could see the group’s average selling prices fall next week, and this could cause a spot of bother for the group if margins get squeezed."