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Schadenfreude to boost full-year results from budget airline easyJet after recent misfortunes of rivals

The Day Ahead also includes updates from blue-chip contract caterer Compass Group, and second line players such as challenger bank CYBG and online electrical appliances retailer AO World

easyJet plane
In a September trading update, easyJet narrowed its profit guidance range for the year to £570mln and £580mln

Budget airline easyJet PLC (LON:EZJ) has been benefitting from the recent misfortunes of rivals, namely Ryanair Holdings PLC (LON:RYA), Monarch and Air Berlin.

Ryanair has been forced to cancel multiple flights this year due to worker strikes, while Monarch and Air Berlin both collapsed last year.

Ahead of its full-year results on Tuesday, FTSE 100-listed easyJet said in a September trading update that these events had provided a boost to demand this year as it narrowed its profit guidance range for the year to £570mln and £580mln from a previous £550mln to £590mln.

Passenger numbers, excluding the operations at Berlin's Tegel Airport that easyJet bought from Air Berlin last December, are expected to rise by 5.4% to 84.6mln for the year on the back of a 4.2% increase in capacity to 90.3mln seats.

Total revenue per seat, excluding Tegel operation, is forecast increase by 6.5% at constant currency.

However, the group has been plagued by rising costs, mainly due to external factors out of its control such as third-party industrial action, severe weather and air traffic restrictions across Europe.

With easyJet having already told investors most of what to expect in the annual results, the focus is likely to be on how the group plans to tackle costs and other external headwinds like Brexit.

Margins the focus for Compass Group

In a third-quarter trading update at the end of July, blue-chip contract caterer Compass Group PLC (LON:CPG) said it was on track to deliver revenue growth at the upper end of a 4%-6% range, with North America to remain particularly strong.

However, margins for the first half of the year were slightly disappointing, so investors’ eyes will mostly be on profitability, though the contract caterer believes Tuesday’s full-year results will show modest progression.

In a preview, George Salmon, equity analyst at Hargreaves Lansdown said: “We’d like to see this ring true – Compass has been working to generate efficiencies through its management and performance plan, so signs this is on track would be well received.”

He added: “After returning £1bn to shareholders as a special dividend last year, we’ll be looking to see what else is coming back to shareholders.”

Any change in outlook eyed from AO World

Away from the big caps, shareholders in electricals retailer AO World PLC (LON:AO.) have already been cautioned that this year’s earnings will be more weighted toward the second half in a trading update last week, so any changes to that outlook will be closely watched when it reports interims on Tuesday.

In the update last week, the company also said group revenue for the six months to 30 September 2018 was up 9.9% year-on-year at £404.2mln, with its UK and EU revenues up 5.7% at £334.8mln and up 35.5% at £69.4mln respectively.

Investors may also be on the lookout for any more news on the acquisition of online-only mobile phone seller Mobile phones Direct, which AO said it was acquiring for £38.1mln.

In a note, analysts at City broker Shore Capital said that while they thought the company had “made some progress” it still remained “sub-scale”.

The broker also reiterated its ‘Sell’ rating on the stock, saying that “the Brexit fog” weighing on consumers coupled with an update from competitor Dixons Carphone Plc (LON:DC.) in December meant “the risks remain on the downside for AO”.

Virgin Money takeover the focus of CYBG results

Meanwhile, challenger bank CYBG PLC’s (LON:CYBG) plan for recently acquired Virgin Money is likely to take centre stage when the bank reports its full-year results on Tuesday.

The group, which also owns Clydesdale Bank and Yorkshire Bank, completed the £1.7bn takeover of Virgin Money last month and now shareholders want to know what the next steps are for the business.

In its latest trading update in July, CYBG said that it expects full-year mortgage growth to be at the lower end of its guidance range due to an “extremely competitive” market.

Despite the competitive pressures in mortgages, CYBG maintained its forecast for net interest margin –  the difference between the interest earned on loans and the amount paid out on savings deposits – of 220 basis points.

UBS said: “We expect shrinking margins and a more difficult loan growth outlook to be confirmed with FY18 results when we expect a reset in medium-term targets to reflect the consolidation of Virgin.”

UBS expects CYBG to report profit before tax of £333mln for the year, up from £293mln in 2017, on broadly flat total income of £1.02bn.

Significant events expected on Tuesday November 20:

Finals: easyJet PLC (LON:EZJ), Compass Group PLC (LON:CPG), CYBG PLC (LON:CYBG), EI Group PLC (LON:EIG), Focusrite plc (LON:TUNE)

Interims: AO World PLC (LON:AO.), Aveva Group PLC (LON:AVV), Accsys Technologies PLC (LON:AXS), Bonmarche Holdings PLC (LON:BON), Big Yellow Group PLC (LON:BYG), CML Microsystems PLC (LON:CML), Eckoh PLC (LON:ECK), Electrocomponents PLC (LON:ECM), Halma PLC (LON:HLMA), Homeserve PLC (LON:HSV), Scapa Group plc (LON:SCPA), Solid State PLC (LON:SOLI), SRT Marine Systems PLC (LON:SRT), Telecom Plus PLC (LON:TEP)

Trading updates: CRH PLC (Q3) (LON:CRH), SIG PLC (LON:SHI), Spectris plc (LON:SXS), Polypipe PLC (LON:PLP)

Economic data: CBI UK industrial trends survey; US housing starts

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