(Bloomberg) -- Cartier-owner Richemont SA and trenchcoat-maker Burberry Plc face challenging year-earlier comparisons when they report this week as earnings season returns in earnest. For both, last year’s fiscal first quarter coincided with China’s re-emergence from lockdown, offering growth before demand swooned later in the year.
Richemont’s resilient jewelry business should act as a buffer, but there’s no letup in sight for Burberry as it navigates a strategy turnaround. Hundreds of jobs may be on the line in the process.
Swiss watchmaker Swatch Group AG warned of a “challenging” Chinese market as it reported a 70% slump in first-half operating profit on Monday, widely short of analyst estimates.
With central banks across Europe in easing mode, the focus will be on the net interest income trajectory for Nordic lenders, who step up bank earnings this week. While Sweden’s SEB AB and Swedbank AB likely saw their NII shrink in the second quarter, Danske Bank A/S may have countered the impact of lower interest rates with deposit hedging.
Nordea Bank Abp saw its net interest income begin to decline in the second quarter as the biggest lender in the Nordic region posted earnings largely in line with estimates, according to its quarterly report on Monday.
Dutch semiconductor equipment maker ASML Holding NV — whose shares surpassed €1,000 apiece for the first time last week — should be on track to meet sales targets after a disappointing first quarter, while Swiss drug giant Novartis AG’s report will be scrutinized for more clues on the growth potential of some of its key drugs.
Highlights to look out for:
Tuesday: Richemont’s (CFR SW) Jewellery Maisons may eke out revenue growth in constant currencies in its fiscal first quarter, but that may be overshadowed by a decline in Specialist Watchmakers sales, consensus shows. The high-end jewelry business, whose contribution to sales has swelled to almost 70% over the past five years, will become even more pivotal in the current fiscal year after management changes at Cartier and Van Cleef & Arpels, according to BI’s Deborah Aitken. With succession planning in full swing, smaller units facing growth and margin erosion may also be ripe for change, she said.
- Analysts expect SEB’s (SEBA SS) NII to continue its sequential decline and year-on-year growth to turn negative in the second quarter. A shift in deposits to higher-yielding accounts, particularly in the Baltics, could increase the risk to revenues posed by interest rate cuts, BI said. A quarterly NII contraction is also in store for Swedish peer Swedbank (SWEDA SS), with an anticipated full-year decline likely to be one of the steepest among Nordic banks, according to BI.
Wednesday: ASML’s (ASML NA) second-quarter sales should show a sequential recovery after going off-kilter in the first three months of the year, consensus shows. Strong demand for lithography tools probably put the semiconductor equipment maker on course to meet consensus operating profit of €1.7 billion ($1.9 billion) and order bookings north of €4 billion, according to BI’s Masahiro Wakasugi. TSMC’s anticipated order for next-generation 2-nanometer technology will be a key catalyst in the second half, according to Citi analysts, who see AI and sovereign investment adding upside to the company’s 2030 revenue target of €44 billion to €60 billion.
- Handelsbanken’s (SHBA SS) cost control will be a focal point once again, with its first-quarter shocker still fresh in investors’ minds. Expenses are estimated to have ballooned 11% in the three months to June 30, while costs for the year are seen up almost 9%, BI said. Chief Executive Officer Michael Green, the bank’s fourth in nine years, may seek to restore market confidence after several communication mishaps since taking the helm in January.
Thursday: Novartis (NOVN SW) is unlikely to raise guidance again when it reports results for its second quarter, as it did last year. While 2024 targets remain achievable, growth dynamics of key drugs like Entresto, Consetyx, Kesimpta, Kisqali and Pluvicto are still under scrutiny, according to BI’s John Murphy and Sam Fazeli. Prospects for MorphoSys’s lead product pelabresib will be pored over now that the €2.7 billion acquisition is under wraps, they said.
Friday: Danske Bank’s (DANSKE DC) revenue probably grew faster than costs in the second quarter, while NII is seen up more than 13%, the highest among regional peers, consensus shows. Next year’s NII trajectory will come to the fore as monetary policy eases, as will the promised update on capital targets and capital distribution, said BI. Consensus points to 28 billion Danish kroner ($4.1 billion) in buybacks through 2026.
- Burberry’s (BRBY LN) retail same-store sales likely slid 16% in its fiscal first quarter, consensus shows, a slump made starker by 18% growth in the same period last year. Weak demand in China and the US won’t lighten the load through the first half, even as the British fashion house changes tack to boost its appeal, BI’s Aitken said. A higher volume of lower-price items and a recovery in tourism could help turn its fortunes around in the second half.
--With assistance from Paula Doenecke and Jack Ryan.
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