Earnings Look Ahead: Netflix, Coke And EasyJet


  • Subscriber growth at Netflix hits a snag
  • We’ll find out how shifting travel restrictions impacted EasyJet’s summer expectations
  • Royal Mail under a little pressure as the e-commerce boom tails off
  • Co-working office provider Workspace continues the long slow recovery
  • Coca-Cola will tell us how smoothly sales in bars and restaurants are recovering
  • Unilever should report sales growth of around 5%

Netflix, Q2 Results, Tuesday 20 July

Subscriber growth at Netflix (NASDAQ:) had already hit a snag in the first quarter and these latest numbers are likely to show a further unravelling of the streaming giant’s market share. Not only are the likes of Disney (NYSE:) and Amazon (NASDAQ:) luring in new viewers with their latest hit shows and back catalogues, but the long-awaited re-opening of cinemas could also dent sign ups.

Cineworld’s deal with Warner Bros to show blockbusters before they are screened is likely to entice more customers away from their sofas into theatres once more. Netflix added just under 4 million net new paid subscriptions in the first quarter, which was sharply lower than expectations. The guidance for the second quarter is for 1 million additions which would mark the lowest quarter ever for Netflix. Adding to pressure is the eye watering cost of creating new content to compete in the now saturated streaming world. The figures may surprise on the upside, but with other entertainment avenues opening up once more, it’s going to be increasingly tough to keep all eyes on the screen.

EasyJet, Q3 Trading Statement, 20 July

When we last heard from EasyJet (OTC:), the group was flying high on hopes that the relaxed travel restrictions would offer the group some semblance of a summer. Fast forward a few weeks, and between the government’s yo-yo travel restrictions and new quarantine rules for Brits in many European countries, we’re wondering if easyJet’s outlook has been lowered. easyJet (LON:) had expected to fly 15% of 2019 capacity between April and June, but Portugal exiting the green list during that time probably dented the group’s forecast. However, with several of easyJet’s destinations now on the green list, we’re keen to know how bookings are progressing for the all-important summer travel season. We suspect everyone’s ready to shrug off restrictions and travel, but question whether the threat of a sudden change to quarantine rules is weighing on passenger confidence. With more routes available, easyJet will be ramping up capacity and filling its planes. Passenger revenue was down 91% last quarter, but we should hopefully see some improvement in the latest results.

HL’s Independent Non-Executive Director, Moni Mannings, is also an independent Non-​Executive Director of EasyJet plc.

Royal Mail, Q1 Trading Statement, Wednesday 21 July

Royal Mail’s (OTC:) new chapter in the began with a fresh upwards march of its share price. It was a slam dunk new entry in early June, after opening a bulging sack of profits, but it’s lost ground over the last month as investors attempt to assess how the re-opening of the economy could affect its prospects going forward. Adjusted operating profits for the year leapt 116% to £702 million, as a surge in parcel volumes at Royal Mail (LON:) coincided with runaway success for its international business GLS. But with high streets opening up, the e-commerce boom has showed signs of waning a little, although online retail sales remain significantly higher than pre-pandemic levels. Keeping a lid on costs going forward will be a challenge as delivering parcels is a more expensive business than light letters. But smoother industrial relations will also put it into a much more stable position for future growth.

Workspace, Half Year Trading Statement, Thursday 22 July

Trendy co-working space was the new concept rippling through the office world until the pandemic struck. As people rapidly turned kitchen tables into desks, the prospects for companies like London based Workspace (LON:) looked dire as buildings emptied while restrictions were imposed. Full year results summed up just how the crisis swung a wrecking ball through the business, with the company posting its first annual loss in more than ten years, with losses before tax of £235.7 million. Like-for-like occupancy shrank to 81.6 per cent, and recovery has been slow. By the end of April occupancy rates reached 30% of pre-Covid levels, but there is clearly a long way to go especially with the working from home advice extended due to the spread of the delta variant. However, the gradual shift out of home working has begun again, and the hybrid approach will offer some long-term opportunities. Younger employees with little prospect of a regular desk in the office, may opt for a seat in a shared space, instead of working from the bedroom for the foreseeable future. WorkSpace, which offers meeting rooms, with on-site cafes and photographic studios, may also benefit from start-ups, in need a location to meet new clients but fearful of taking on a longer-term lease.

Coca-Cola, Q2 Trading Statement, Thursday 22 July

During the pandemic Coca-Cola (NYSE:) made fewer sales in bars and restaurants and more in shops. This has put pressure on pricing and therefore profit margins. But now that society is opening back up, this trend can be expected to reverse. Overall volumes were in line with 2019 in March, and we’re keen to see how sales have evolved since then. Interestingly, despite gaining market share in both shops and bars, Coca-Cola has managed to lose market share overall. This is because the group has an unusually strong position in bars and restaurants, so falling sales there have been enough to shrink Coke’s share of the market. Alongside regional sales patterns, we’ll be looking for updates on Coke’s new brand launches. Coke has been employing a “lift and shift” strategy, which means successful products in one market are lifted and shifted to others. We’ll be looking for any products that seem like they could be especially successful.

Unilever, Results, Thursday 22 July

CEO, Alan Jope, said Unilever (NYSE:) expects to “deliver underlying sales growth in 2021 within our multi-year framework of 3-5%, with the first half around the top of this range”. Next week we’ll find out if that target’s intact. We expect the trading picture is still mixed. Unilever has a huge global footprint, and different markets are recovering from Covid at different rates. In particular, we’ll be looking at what the challenging conditions in India mean for the group. Closer to home, the European restaurant scene will also be worth a close up. Restrictions had been holding Unilever’s out-of-home revenue back. With vaccine roll outs continuing, we wonder if there are some green shoots of progress on that front. Finally, we’d like to see Unilever’s new volume-led approach to sales remain. This is more favourable than relying on price increases, and in the first quarter volumes were up 4.7%, against price increases of 1.0%.





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