UBS Strategy, Telecom Cash Flow Eyed in European Earnings Next Week - Yahoo Finance

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(Bloomberg) -- UBS Group AG tops the billing this week, when a bevvy of telecommunications companies from Europe and Africa also report.

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UBS will be eager to show the benefits of its takeover of Credit Suisse in results on Tuesday, the first full quarter including the acquired business. While reports from US and European peers bode well, much of the Swiss bank’s fortunes hinges on its ability to retain talent and put Credit Suisse’s troubles swiftly behind it.

Shareholder returns and cash flow have moved to the fore for Deutsche Telekom AG and Telefonica SA as telecommunication companies barrel ahead with the rollout of 5G services across Europe. With costs for internet infrastructure mounting, operators are pushing for major streaming sites to help foot the bill.

Deutsche Telekom last week said it plans to increase this year’s dividend by 10% to 77 cents a share and buy back €2 billion ($2.15 billion) of shares in 2024, helping extend this year’s stock gains to 15%. Telefonica’s medium-term free cash flow target will be key in its report, Bloomberg Intelligence said.

Telefonica’s smaller Spanish competitor Cellnex Telecom SA and Kenya’s biggest listed company Safaricom Plc are also due as are planemaker Airbus SE, steel giant ArcelorMittal SA and Danish wind turbine maker Vestas Wind Systems A/S.

Highlights to look out for:

Monday: Ryanair (RYA ID) announced its first-ever dividend, earmarking a €400 million payout, after clocking a 59% jump in profit after tax for the first half. At the same time, it cautioned that a significantly higher fuel bill and delays with deliveries of Boeing Co. aircraft are having adverse effects, saying the extra cost for kerosene means it probably won’t replicate last year’s fiscal third-quarter performance.

Tuesday: Underlying wealth flow and deposits will be the focus in UBS’s results, according to BI’s Alison Williams. Some return of client assets could bolster confidence even if pretax profit is minimal. UBS may also benefit from trading activities being skewed more to equities than fixed income.

Wednesday: Telefonica’s (TEF SM) results may play second fiddle to its medium-term strategy as the earnings report coincides with a Capital Markets Day. The cash flow outlook will be key, following the loss of a wholesale contract with mobile operator 1&1 AG, as well its ambitions in key markets Spain, Brazil and Germany. Growth may have accelerated modestly in the third quarter amid easing cost comparisons, BI said. All eyes are on the Spanish government’s next move after it said it’s considering taking a stake to shield the company from foreign takeovers.

Airbus’ (AIR FP) third-quarter deliveries largely met consensus, setting the stage for its report. Revenue and adjusted Ebit probably rose, although supply chain issues remain a risk, according to BI. Adjusted Ebit is seen up 40% at €1.17 billion, consensus shows.
While Orsted’s troubles last week highlight the crisis engulfing the wind industry, Vestas’ (VWS DC) order intake jumped more than 70% from the second quarter, BI said. Offshore orders may have helped third-quarter Ebit before items more than double year-on-year, estimates show.

Thursday: Deutsche Telekom’s (DTE GY) dividend and buyback plans may be just the start, BI said. Full-year free-cash-flow consensus of €16 billion has “a modest upside” given the company’s resilient ex-US performance, consistent cost control and better than expected third quarter in the US. While adjusted Ebitda after leases is expected to have slipped to €10.3 billion last quarter, consensus puts the core metric for the full year at about €41 billion, in line with the company’s August guidance.

Safaricom (SAFCOM KN) may report slower revenue growth for the first half, held back by cuts to voice-termination rates and a reduction in overdraft fees, according to BI. Its new operation in Ethiopia, Africa’s second-most populous nation, will help boost sales, while also increasing risk.
ArcelorMittal’s (MT NA) third-quarter Ebitda probably slid toward $1.7 billion due to “sharply” lower metal spreads on both sides of the Atlantic, BI said. Still, price lags mean earnings may have gotten a partial reprieve from strong steel prices in the previous quarter.

Friday: Cellnex (CLNX SM) will try to show it’s on track to achieve an investment grade rating, after abandoning M&A-driven expansion last year. Cellnex may be able to deleverage further after selling 49% of its Nordic business to private equity, with similar deals potentially following, Citi analysts said. A rating change could be on the cards in 2024, according to BI.

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For more on what’s going on in other regions, see the US Earnings Week Ahead or the Asia Earnings Week Ahead, and see the ESG Week Ahead for a selection of the environmental, social and governance themes that may come up on the week’s earnings calls.

--With assistance from Helen Nyambura, Paula Doenecke, Alexey Anishchuk, Jenny Che and Christopher Jungstedt.