High Bar for European Profit Rebound Leaves No Room for Setbacks
Bloomberg 1/17/2021 Joe Easton
(Bloomberg) Europe is kicking off the year’s first earnings season with expectations running high after a strong equity rally, setting the stage for disappointment if companies signal further pandemic pain.
With luxury brand Burberry Group Plc, chip equipment maker ASML Holding NV and miner Rio Tinto Group among some 30 companies in the Stoxx Europe 600 Index posting earnings or sales updates in the next week, investors are seeking reassurance about a recovery beyond the lockdowns currently weighing on sentiment. Analysts predict a strong profit rebound this year, following last year’s sharp slump triggered by the impact of Covid-19.
Defense-services firm
Babcock International Group has seen its shares fall about 67% to 315 pence ($4.20) in the past five years, over investor concern about its strategy and previous management.
The U.K.-listed company (ticker: BAB.United Kingdom), which maintains nuclear submarines and army vehicles for Britain’s defense department, also services civil nuclear facilities and operates aerial rescue and firefighting equipment for emergency-services clients.
Babcock’s growth slowed in 2019, which the company blamed on fears that Brexit would impact trade, and it wrote down the value of its oil-and-gas aviation division, which transports workers to rigs.
This year, Babcock sunk to an annual loss, deferred its dividend, saw delays to contracts due to Covid, and saw costs increase to contain the virus. Shares are down about 51% this year.