Source: Sharecast
As far as Diageo is concerned, Richard Hunter, head of markets at Interactive Investor, said: "The full year results will run alongside a strategy day for investors, where it is anticipated that CEO ‘Drastic Dave’ Lewis will announce some substantial job cuts as he tries to revive the fortunes of the ailing drinks giant.
"He certainly has his work cut out, with Diageo’s latest third-quarter update in May revealing a 9.4% decline in sales in North America as the spirits market remained challenging. However, this was offset by 0.3% growth overall, with some progress in Europe, Latin America and Asia. As such, the group maintained its guidance for the full year for an annual sales decline of between 2% and 3%, with operating profit expected to be between flat and a low-single digit higher.
"A cut to the dividend from 40.5 cents to 20 cents is further proof of financial pruning, while the need for a more competitive offer in the US is near the top of the agenda. More broadly, it remains to be seen whether the concerns overhanging the sector as a whole are cyclical or societal. There is some evidence of customers trading down to cheaper alternatives, which provides an immediate headwind to Diageo’s premiumisation aspirations.
“Meanwhile, there is some debate as to whether the younger consumer market is a growth area at all given changing attitudes, although the growing proliferation of the ‘moderation’, low to no-alcohol drinks could provide an opportunity. In addition, the pandemic ‘drink at home’ boom has long since subsided, on top of which some are questioning whether the exponential growth in weight-loss drugs is a contributing factor to falling sales."
Hunter said that in terms of performance, the jewel in the crown remains the Guinness brand.
"Apparently exempt from the concerns seen elsewhere by geography, habits or price, the stout continues to produce sales growth, with double-digit hikes having previously been established for the fifth consecutive year," he said.
Investors will also eye half-year results from Persimmon, Serco, Michael Page, Quilter, TP Icap, OSB Group, Morgan Advanced Materials, Hikma, Harbour Energy and Tritax Big Box, and Q1 results from Wizz Air.
On the macro front, eurozone retail sales for June will be released, along with German factory orders for June and the S&P Global UK construction PMI for July. In the US, the latest US initial jobless claims will be out.
