Aviva PLC (LON:AV.) arguably got its big news out early this week before Thursday’s results statement, when on Tuesday Maurice Tulloch became the insurer’s new chief executive.
Tulloch was most recently head of international insurance, has been with Aviva since 1992 and joined the board in June 2017.
Now that the leadership question has been answered, attentions turn to other questions.
“What does the group plan to do with a capital base that’s already at the top end of target?”, is one such question put forward by Sophie Lund-Yates, equity analyst at Hargreaves Lansdown.
“A share buyback was completed in September - that could be extended, or the group might undertake some M&A.
“However, Aviva could move to shore up its balance sheet ahead of Brexit, so a decision to decrease leverage might be more plausible.”
Lund-Yates said the big question, however, is how exactly does Aviva intend to deliver revenue and profit growth in the years ahead.
“Its core markets, UK life insurance and personal insurance in the UK and Canada, are both mature and unlikely to deliver rapid growth under the current set up. Aviva Investors saw £2.5bn of inflows from UK investors at the half year but is likely to be experiencing similar margin pressures to those across the wider asset management space. “
Premium increases the focus for Admiral
Another insurer will also be in the spotlight Thursday, as Admiral plc (LON:ADM)reports on its full year.
Interim results last August were well-received thanks to decent growth in the car insurance business.
The whole sector got a boost earlier this year when industry data showed a rise in car insurance premiums, so investors will be looking for any comments from the company on that in Thursday’s fourth-quarter update
The uncertainty around Brexit also remains a concern for a company with a European business which is performing well. The market is expecting to see a 9% rise in dividends this year so that will also be a focus in Admiral’s numbers.
Vegan sausage roll bringing home the bacon for Greggs
High street pasty maker Greggs plc (LON:GRG) has been on a roll of late, raising its outlook three times over the past two-and-a-bit months.
The bakery confirmed in January that full-year underlying profit for 2018 will be at least £88mln, with the upgrade driven by surging demand for its festive bake and mince pies over Christmas.
Its vegan sausage roll has also proved a hit, too, and Greggs recently said profits for 2019 will be better than expected after the “extensive publicity” generated by its new product sent sales soaring in the opening few weeks of the year.
Given that the latest update was only a couple of weeks ago, not much is likely to have changed and the tone from management is likely to remain bullish. But the company is trading at a fairly hefty 32 times earnings, so any sign of a slowdown will likely be punished by the market.
Growth plans and priorities eyed from Premier Oil
Investors following Premier Oil PLC (LON:PMO) in recent months will already know about its year of production growth, its ahead of schedule debt reduction, and its success with the impressive Zama oil discovery in Mexico.
Output increased by 7% to average 80,500 boepd in 2018, with notably higher rates seen in November and December. Positive cashflow naturally followed and Premier was able to beat its debt reduction target by some US$100mln.
Thursday’s results statement will dot the i’s and cross the t’s, and, aside from outlook and targets for 2019, attention may well be on whatever commentary around Premier’s growth plans and priorities going forward.
The Falklands perhaps represents an increasingly uncertain position, particularly in light of the scale and potential of Zama and rumoured appetite for North Sea acquisitions – with recent press reports suggesting Premier had ‘teamed up’ with Apollo private equity funds to bid for Chevron owned North Sea assets.
Last month, Premier issued a statement acknowledging (somewhat) that it may, or may not, acquire more North Sea assets – following similar reports that it was vying for the Chevron assets – as a report in The Times suggested a “giant cash call” was being considered to fund a deal, which was said to have a gross cost of around US$1.5bn.
So, between the demand of new ambitions, debt repayment obligations and rival projects within Premier’s own portfolio, one might wonder whether the Falklands project could remain on the back-burner for a while longer yet.
Development of the Sea Lion field has for some time been at the point of treading water, with a partner sought to join Premier and Rockhopper to finance the project.
A January investor presentation indicated ‘infill or development drilling’ at Sea Lion across late 2020 and into 2021, albeit those will remain loose plans until new partner-sourced financing is in place and a final investment decision is made.
Thursday March 7:
European Central Bank council meeting
Finals: Aviva PLC (LON:AV.), Admiral Group PLC (LON:ADM), Greggs plc (LON:GRG), Melrose Industries PLC (LON:MRO), Premier Oil PLC (LON:PMO), Cobham PLC (LON:COB), Informa PLC (LON:INF), Ophir Energy Plc (LON:OPHR), Spirax-Sarco PLC (LON:SPX), Inmarsat Plc (LON:ISAT), Spirent Communications PLC (LON:SPT), NMC Health plc (LON:NMC), AIREA PLC (LON:AIEA), IndigoVision Group plc (LON:IND), Alfa Financial Software Holdings PLC (LON:ALFA), AIREA PLC (LON:AIEA), Cairn Homes PLC (LON:CRN)
Interims: Inland Homes Plc (LON:INL)
Ex-dividends to chop 21.7 points off FTSE 100 index: BHP Group PLC (LON:BHP), Persimmon PLC (LON:PSN), Rio Tinto PLC (LON:RIO), RSA Insurance PLC (LON:RSA), Standard Chartered PLC (LON:STAN), Evraz plc (LON:EVR)
Economic data: Halifax UK house price index; US weekly jobless claims; US Challenger job cuts