Aviva Plc (LON:AV.) will be in focus on Thursday with the blue chip insurance firm’s new chief executive, Maurice Tulloch due to deliver his long-awaited future strategy for the business.
According to a recent report in the Financial Times, Tulloch unveil a big shake-up which could include a break-up of Aviva’s UK business. Such a move would reverse Aviva’s decision to merge its two main businesses in 2017.
Tulloch, who was appointed to the top job at the insurer in March this year, has said he wants to “re-energise” the group and is believed to want to simplify the business.
At Aviva’s recent annual meeting he said the company was “still too complex”.
Along with a potential plan to simplify the group, Tulloch is also likely to announce a push to make Aviva more efficient as costs have been rising in recent years.
Odds against CMC Markets after warning
Investors are unlikely to be betting on the final results from CMC Markets Plc (LON:CMC), also due on Thursday, after the spread-betting firm warned in April that changes to rules governing customer trading had hit it harder than expected.
Revenues for the year from CFD and spread betting operations are expected to drop by 37% to US$110mln, while net operating income will be US$131mln. Costs are also running higher than expected.
Aside from the damage assessment news in the figures, investors may also be eyeing any news on a potential successor to CMC’s outgoing finance boss and chief operating officer Grant Foley.
Auto Trader to drive up profits
FTSE 100 constituent Auto Trader Group PLC (LON:AUTO) is expected to unveil a 10% rise in pre-tax profit on the back of higher sales when the car market place firm reports its full-year results on Thursday.
Citigroup is forecast the group reporting pre-tax profit of £238.9mln for the year to the end of March 2019, compared to £214.5mln a year earlier, and sees sales increasing to £352.4mln from £330.1mln. The broker anticipates Auto Trader will raise its dividend to 6.4p from 5.9p last year.
Citi thinks the company is “a high-quality asset, operating in an attractive competitive landscape” in which it is the “clear leader”.
“Against this, the shares have performed very strongly in the last 15 months, and are now trading at a premium to peers and notably, recent take-out multiples in the space. In addition, we think there may be some risk around capital flowing out of domestic online classified names (including Auto Trader) as Nasper’s spins out the largest internet stock in Europe.”
Mitie turnaround plan to boost profits
Also on the turnaround front, outsourcer MITIE Group PLC (LON:MTO) is nearing completion of its strategy plan, which is expected to benefit the firm’s full-year results on Thursday. In a March trading update, the group said it expects full-year operating profit before other items to be in the range of £84mln-£87mln, up from £83.2mln the previous year.
Profits will be boosted by higher revenue, cost savings from the company’s Project Helix restructuring plan and a positive contribution from Vision Security Group, the security services business Mitie took over from contractor Compass Group last year.
Mitie anticipates a revenue increase of 7%-8% and organic revenue growth of 4% for the year, led by a strong performance from its security and care and custody businesses. However, the order book is likely to fall by 10% as clients have steered away from entering longer-term contracts.
For the next financial year, Mitie sees “moderate growth” in operating profit as higher revenue and cost savings mitigate lower margin contract renewals and investments in the business.
Could ECB meeting be interesting – for a change?
Thursday’s decision from the latest European Central Bank Council meeting could be an interesting one – for a change!
In a preview, Markets.com’s Wilson pointed out: “The pressure is mounting on the ECB now to do more – I would expect a further dovish move to tee up more easing later in the year.
“Minutes from the April meeting show deteriorating confidence in the ECB achieving its growth and inflation targets. ‘Recent data had turned out even weaker than expected,’ the minutes read, adding that there was ‘somewhat less confidence' in hitting the growth target. Meanwhile some policymakers thought that inflation was ‘uncomfortably low’.”
He added: ““In short, the minutes showed the ECB is sticking to its guns but only just. There are serious doubts now and clearly the risks are skewed to the downside. One rather feels the ECB has at last woken up to the fact that it missed its chance and is now embarking on a fresh easing cycle that may involve a combination of further rate cuts and fresh QE.”
Wilson also pointed out that with the ECB’s president Mario Draghi's on the way out this year, the market cannot likely expect the current 2020 hike forward guidance to be removed or any new QE (quantitative easing) launched until his successor is in place.
“However,” the market analysts added, “could the arch-dove deliver a parting gift to the person who replaces him?”
Significant announcements for Thursday June 6:
European Central Bank council meeting
Trading update: Joules Group PLC (LON:JOU), Loungers PLC (LON:LGRS)
Strategy update: Aviva PLC (LON:AV.)
Finals: Auto Trader PLC (LON:AUTO), CMC Markets Plc (LON:CMCX), MITIE Group PLC (LON:MTO), First Property Group PLC (LON:CMCX)
AGMs: IQ-AI Limited (LON:IQAI), Telit Communications PLC (LON:TCM), Xpediator PLC (LON:XPD)
Ex-dividends to knock 7.2 points off FTSE 100 index: Associated British Foods plc (LON:ABF), Johnson Matthey PLC (LON:JMAT), Kingfisher PLC (LON:KGF), J Sainsbury PLC (LON:SBRY), Scottish Mortgage Investment Trust PLC (LON:SMT), Taylor Wimpey PLC (LON:TW.), Vodafone PLC (LON:VOD)
Economic data: UK Halifax house prices; US balance of trade; US weekly jobless claims