Direct Line to report higher 2018 profits despite large weather-related claims

The day ahead includes full year results from Direct Line and GVC along with a trading update from Ashtead

Direct Line
Deutsche Bank expects Direct Line to post pre-tax profit of £579mln for the year

Direct Line Insurance Group PLC (LON:DLG) is expected to report a 7.4% rise in pre-tax profit for 2018 despite being hit by weather-related claims and a decline in UK motor insurance premiums.

Deutsche Bank forecasts pre-tax profit of £579mln for the year, compared to £539mln in 2017, and a dividend of 26.9p, down from 35.4p last year.

The investment bank said it expects weather losses of £105mln and a £44mln related to the so-called Ogden rate – the amount of compensation paid to accident victims.

It predicts a combined operating ratio – a key measure of profitability for insurers – of 91.8%, up from 90.8% a year ago.

In a third-quarter trading update last November, Direct Line said gross written premiums fell 5.8% to £854.5mln in the three months to September 30 as weather-related claims and intense competition took their toll.

However, the company said it was on track to meet its 2018 and medium-term financial targets.

It will be the last set of annual results under chief executive Paul Geddes, who is being replaced by chief financial officer Penny James in May.

GVC earnings to beat market forecast

Gambling operator GVC Holdings PLC (LON:GVC) will also post its full year numbers on Tuesday.

In January, the group said it expects 2018 earnings (EBITDA) of £750mln-£755mln, ahead of the consensus market forecast of £739mln.

Net gaming revenue increased 9% over the year, boosted by strong growth in the online division.

Investors will be on the look-out for any new details around the firm’s US strategy, especially its joint venture with MGM resorts as it could be a main source of future growth.

Any changes to the £160mln hit from changes to the maximum stake for fixed-odds betting machines in the UK will also be watched, especially if it goes up.

Investors await Ashtead’s outlook for US business

Equipment hire giant Ashtead Group PLC (LON:AHT) raised its full-year guidance in December after a robust first half.

The group, which posts a trading update on Tuesday, said first-half profit jumped by a fifth, led by a strong performance from its US Sunbelt unit.

However, since the first-half statement in December, data has revealed a slowdown in the US housing market, which could impact demand for Ashtead’s forklift trucks and diggers in the nation.

Investors will be therefore be looking for comments on the outlook for the US business since it accounts for a large proportion of overall sales.


Major announcements due:

Trading update: Ashtead PLC (Q3) (LON:AHT)

Finals: Direct Line Insurance Group PLC (LON:DLG), GVC Holdings PLC (LON:GVC), Intertek Group PLC (LON:ITRK), Phoenix Group Holdings PLC (LON:PHNX), BBA Aviation PLC (LON:BBA), Ibstock Plc(LON:IBST), e-therapeutics PLC (LON:ETX), Elementis PLC (LON:ELM),  Huntsworth PLC (LON:HNT), LSL Property Services PLC (LON:LSL), 4Imprint Group PLC (LON:FOUR), MPAC Group PLC (LON:MPAC), Getbusy PLC (LON:GETB), Harworth Group PLC (LON:HWG), Apax Global Alpha Limited (LON:APAX), Science Group PLC (LON:SAG)

Interims: Craneware PLC (LON:CRW), Netcall plc (LON:NET)

Economic data: UK services PMI; US new home sales; US non-manufacturing PMI; US services PMI

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