Plumbing and heating supplies group Ferguson Plc (LON:FERG) is expected to report solid first-half results, notwithstanding the effects of volatile exchange rates.
Ferguson – which changed its name from Wolseley last year to reflect its increased US bias – is likely to continue to be supported by ongoing strength in both the residential and non-residential repair, maintenance and improvement markets, based on reports from their key US peers.
However, with the group’s poorly performing Nordic division being sold off, more attention will also go onto its UK business, which has also struggled lately due to a challenging environment.
Credit Suisse recently cut its price target for Ferguson back to 6,280p from 6,500p given the year-to-date weakening of the pound but reiterated an 'outperform' rating on the stock as it believes the group’s fundamentals are still solid.
The Swiss bank also lifted its group organic growth estimates for the Plumb Center owner for the next three years, pointing to a better demand outlook.
Irn-Bru reformulation key for AG Barr
The soft drinks industry is facing a shake-up with the introduction of a tax on soft drinks with higher sugar contents from April, and Irn-Bru maker AG Barr PLC (LON:BAG) has responded by reformulating its products to lower sugar recipes.
As a result, 99% of the firm’s portfolio will be exempt from the new levy; however, there have been concerns that the reformulated drinks could alienate the group’s legions of fans, though a February trading update suggested the new formulations had been well received.
However, it is vital that early performance continues, so commentary around ongoing Irn-Bru sales will be critical in AG Barr’s full-year results on Tuesday.
Investors eye inflationary impact on United Utilities
United Utilities is bracing for a tougher regulatory stance from Ofwat and has been in discussions with the watchdog over its future business plan.
At the first half results in November, the company said its “leading operational performance and customer satisfaction places us in a good position heading into the next regulatory review”.
Higher inflation raised its finance costs by £29mln in the period to £155mln, though it managed to eke out a £5mln increase in underlying pre-tax profits to £194mln.
The company shouldered £3.7bn of inflation-linked debt to help fund its investment in upgrading water networks in the north west of England by 2020.
Investors will be looking to see how well the company has responded to inflationary pressures and regulatory challenges when it reports a pre-close trading update on Tuesday.
“The threat that has come from regulatory and political issues has led to poor share price performance over the last 10 months,” said Graham Spooner, investment research analyst at The Share Centre.
“Investors who normally expect little in the way of excitement from trading updates will be looking closely for signs of management defending the sector as well as comments regarding future dividends.”
Significant announcements expected
Trading update: United Utilities PLC (LON:UU.)
Interims: Ferguson Plc (LON:FERG), Earthport plc (LON:EPO), Orchard Funding Group PLC (LON:ORCH)
Finals: Ladbrokes Coral Group PLC (LON:LCL), AG Barr PLC (LON:BAG), Alliance Pharma plc (LON:APH), Billington Holdings PLC (LON:BILN), Biome Technologies PLC (LON:BIOM), T Clarke PLC (LON:CTO), DP Poland Plc (LON:DPP), Elecosoft PLC (LON:ELCO), e-Therapeutics PLC (LON:ETX), Gulf Marine Services PLC (LON:GMS), Moss Bros Group plc (LON:MOSB), Nostrum Oil 7 Gas PLC (LON:NOG), Scisys Plc (LON:SSY), STM Group Plc (LON:STM), S&U PLC (LON:SUS), Touchstone Exploration Ltd (LON:TXP)
Economic data: Bank of England Financial Policy Committee minutes; US consumer confidence index; US Case-Schiller house prices