Why do so many major companies release results on the same day in July? | Business News

What do the next have in widespread – Centrica, Rentokil, BT, Barclays, Anglo American and St James’s Place?

On the face of it, not very a lot.

All, although, have been updating the market on their latest buying and selling.

Many others have been, too, amongst them Relx, the info and analytics large; Schoders, the asset supervisor; Shell, the oil supermajor; Sage, the accounting software program group; Frasers Group, Mike Ashley‘s retail conglomerate and RS Group, the elements distributor.

In all, some 16 FTSE-100 constituents – virtually one in six members of the index – have been publishing monetary outcomes.

Exterior the Footsie, there was additionally a blizzard of outcomes, with ITV amongst firms updating the market.

It’s possible you’ll not suppose this issues very a lot. However it does.

The issue with spreading assets thinly

So many firms publishing their outcomes on the identical time makes it very tough for traders, analysts and the media to correctly assess how a enterprise has traded in latest months and kind a judgement on the way it will do in coming months.

The ranks of Metropolis analysts have already been slashed since the introduction of the EU’s MIFID II directive and that has led to an absence of analysis on a variety of quoted firms, particularly within the small and mid-cap sectors.

Accordingly, all these companies releasing outcomes on the identical day merely spreads the assets of those that stay much more thinly.

Firm outcomes go under-researched – and, probably, share worth anomalies emerge in consequence. That creates alternatives, after all, for individuals who do have the assets to correctly analyse firm outcomes. However it additionally leaves a variety of different traders probably short-changed.

Why does this occur?

Why has this example emerged?

There are a couple of causes.

The primary is the insistence from regulators that firms get their outcomes out in a well timed method.

Most firms today have a December monetary year-end.

Which means the primary half of their monetary 12 months is on the finish of June – and, with firm finance departments taking a month or so to tot up their outcomes after which submit them to the auditors for his or her blessing, means a barrage of outcomes hit the screens within the remaining week of July.

It was once completely different

Not so way back, maybe 1 / 4 of a century again, a variety of firms have been glad to go away and have a summer season break and get again to issuing their half 12 months leads to September.

Regulators today, although, insist on a extra fast publication of outcomes lest a false market emerges in some share costs. Therefore the tip of July rush.

Why Thursdays are in style

There may be additionally a cause why outcomes all are inclined to land on a Thursday.

Firms, particularly the bigger ones, desire to not launch their outcomes on a Monday or Tuesday as a result of it typically obliges firm chief executives and chief monetary officers to rehearse shows to traders throughout the previous weekend.

They like to do this as soon as the working week is underneath method – making the tail finish of the week a greater choice.

Fridays are typically out – a throwback to the times when senior Metropolis people would have left for his or her nation retreats by Friday lunchtime – and in order that leaves Wednesday or Thursday. Happening a Thursday offers further time at first of the work to rehearse investor shows and take into consideration one of the simplest ways by which, for instance, a poor set of outcomes may be offered to the market extra favourably.

Why July and February are busy

It at all times implies that the final Thursday of July, the primary and second Thursdays of February (full 12 months outcomes at all times take a bit longer to organize attributable to Christmas holidays) and, to a lesser extent, the ultimate Thursdays of April and October (for these firms who publish quarterly outcomes) at all times are typically chocker with outcomes.

Not a lot may be performed

Is there something that may be performed about it? Probably not.

It’s unlikely that firms are going to maneuver away from December or June monetary 12 months ends and the Monetary Conduct Authority isn’t going to water down its guidelines on the well timed reporting of economic outcomes.

A potential US resolution

One resolution that’s generally proposed is for UK-listed firms to publish their outcomes after the market has closed, one thing that’s commonplace in america.

The issue with that, although, is that the US has a way more established custom of after-hours buying and selling whereas the UK doesn’t. As well as, liquidity (the benefit with which a safety may be purchased or bought) is far decrease in after hours buying and selling, so worth actions are typically extra risky, one thing that may put small traders particularly at a drawback.

So it appears traders are saddled with the present association.

At the moment’s outcomes

Within the meantime, what may be deduced from as we speak’s outcomes?

It isn’t at all times apparent from share worth actions, which may typically merely mirror the extent to which an organization’s outcomes have been in keeping with the market’s expectations going into these outcomes.

Typically, although, outcomes may be bang in keeping with expectations and a share worth will unload, as is the case when an organization is thought to be rising strongly, one thing that occurred this week with Compass, the world’s largest contract catering firm, an impeccably run enterprise that traders understand as having sturdy development prospects.

Usually, although, it relies on the outlook assertion and what firm officers say to traders on the day.

Outcomes days are sometimes when firms attempt to reset market expectations.

Bear that in thoughts with as we speak’s outcomes.

Centrica has turned out to be the star performer within the Footsie.

A giant restoration in earnings at British Fuel had been factored in however maybe not as large because the one which was introduced. Buyers additionally appreciated the extension of the corporate’s share buy-back programme.

One other stand-out was Informa, the world’s biggest exhibitions and events organiser, where again the strong momentum recently flagged by the company had not been sufficiently priced in by the market.

Meanwhile Airtel Africa, one of the more recent additions to the FTSE-100, was also another strong gainer despite reporting a quarterly loss after tax of $151m.

This, though, had already been flagged to the market – it was due to a devaluation of Nigeria’s naira – and investors chose to focus instead on the fact that the company, whose shares had fallen by 18% since mid-June, reported strong sales growth in all parts of its business.

Another stand-out among those companies reporting today is Relx, the data information and analytics specialist, one of a handful of British companies that can be regarded as a genuine world leader in its field. The best performing stock in the FTSE-100 over the last decade, hopes are running high for Relx, with a leading Wall Street bank recently naming it as one of the 10 global companies – alongside Microsoft and Nvidia – most likely to benefit from generative artificial intelligence.

The 9% rise in half year sales it unveiled today were enough to satisfy its followers that their faith was not misplaced.

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To the downside, the wealth manager St James’s Place saw its shares fall by 15% after the wealth manager cut its forecast for the margin it receives from investment management fees, while Shell fell because the $5.1bn adjusted earnings it reported for the three months to the end of June was well short of the $5.6bn the market had expected.

The other big disappointment of the day was Barclays, whose shares fell by 6% at one point, with its half year results containing a plethora of bad news.

Impairments against doubtful loans were up sharply, customer deposits were down, investment banking revenues – a crucial part of the business – compared unfavourably with Wall Street rivals while the net interest margin – the difference between what a bank charges borrowers and pays depositors – is set to fall as the benefits of higher interest rates to the lender drop away.

Today’s clutch of results from the FTSE-100 saw more share price gainers than fallers among those reporting. Did that mean the prospects for such companies are better, for most, on balance?

Not necessarily. The index, after a brief flurry last year, has reverted to its usual habit of underperforming those in Europe and the US. That means many UK-listed companies are again trading at a discount to global peers.

The reason for that, though, is a story for another day.