UBS Fee Boost, Vestas Wind Margins: EMEA Earnings Week Ahead

This content was published on August 12, 2024 - 08:56

5 minutes

(Bloomberg) — A strong second-quarter showing by investment banking peers sets a high bar for UBS Group AG, reporting this week.

Robust equities likely helped wealth and asset management fees, while the performance in Asia will be a key health gauge as the Swiss bank presses ahead with the integration of Credit Suisse, Bloomberg Intelligence’s Alison Williams said.

Capital returns are also high on the agenda, as investors await confirmation of UBS’s plan to buy back up to $1 billion of stock this year and as Swiss regulators press for changes that could see its capital requirements surge.

Falling steel costs and rising turbine prices should have aided margin recovery for Danish wind giants Orsted AS and Vestas Wind Systems A/S.

Political support for renewable energy will be essential to sustain growth, which could be called into question if Donald Trump gets the keys to the White House in November’s presidential election.

Disappointing beer volumes from Heineken NV and Anheuser-Busch InBev NV in the second quarter illustrate the challenges facing Danish brewer Carlsberg AS, due on Wednesday.

Irish gambling company Flutter Entertainment Plc, German industrial group Thyssenkrupp AG, Dutch fintech Adyen NV and South Africa’s Standard Bank Group Ltd also report.

(Note: This will be the last EMEA Earnings Week Ahead in the current season. We will resume coverage in October)

Monday: German reinsurer Hannover Re (HNR1 GY) reported net investment income for the second quarter that beat the average analyst estimate.

Tuesday: Flutter’s (FLTR LN) increasingly US-focused operations likely spurred first-half adjusted Ebitda for the region to almost triple, compared with just 3.2% growth in the UK and Ireland, consensus shows. Launches in new states should continue to drive player growth, but regulations still pose a challenge across core markets and areas targeted for investment, like India, said BI analyst Conroy Gaynor.

Wednesday: UBS’s (UBSG SW) investment-banking fee growth could top the 40% delivered by Wall Street, according to BI. Trends in Asia will also be in focus as Iqbal Khan prepares to relocate to the region the bank is counting on for future growth. He’s a contender to succeed Chief Executive Officer Sergio Ermotti. The expected plunge in the bottom line is mainly the result of a multi-billion accounting gain booked a year earlier, consensus shows.

Vestas Wind Systems’ (VWS DC) Service division likely showed adjusted operating profit growth accelerated in the second quarter. Citi analysts predict a “positive inflection” in second-half earnings as legacy contracts fall out of the mix and installation volumes grow from the 2023 trough. Longer term, growth is dependent on continued policy support in Europe and the US, which a Trump presidency could put in jeopardy.
Carlsberg’s (CARLB DC) first-half operating profit likely benefited from volume recovery in Europe during the period, as major sports events boosted beer consumption. This may have helped offset weakness in Vietnam and poor premium energy drink sales in Cambodia, BI’s Duncan Fox said. The company’s impending acquisition of Britvic is expected to add to earnings per share in the first year after completion.
Thyssenkrupp (TKA GY), nursing a July profit warning that exacerbated the stock’s almost 50% decline this year, may reveal more about its intentions for the Steel Europe unit in its third-quarter report. It plans to sell a stake in a German industrial site after a supervisory board meeting ended without agreement on a broader restructuring of the ailing division, the company said late on Friday.

Thursday: Orsted’s (ORSTED DC) second-quarter results should confirm that the “growing pains of the past” are now behind it, Citi analysts said. Capacity expansion in the offshore and onshore wind businesses should drive Ebitda growth, though an impairment on US assets could be a counterweight. Orsted needs more than asset disposals to sustain profitability, the analysts said.

Standard Bank (SBK SJ) is expected to report slower net interest income growth for the first half as the South African economy remains under pressure and policy rates in some of the group’s other African markets have started falling. Costs are likely to continue weighing on the outlook, according to BI.

Friday: Adyen’s (ADYEN NA) second-quarter take rate, the proportion the payments firm charges merchants for each transaction, is key after a decline in the first three months that wiped out almost 20% of the company’s market value at the time. Processed volumes should top the first quarter’s, consensus shows. While competition is heating up, the company remains well positioned to expand market share, BI’s Tomasz Noetzel said.

–With assistance from Paula Doenecke, Laura Malsch and Rene Vollgraaff.

(Adds Hannover Re results. An earlier version was corrected to clarify the reason for UBS’s expected profit decline)