Prudential PLC (LON:PRU) is nearing the completion of its planned demerger so this will be a key area of focus when the group reports its first-half results on Wednesday.
The life insurance and pensions giant is splitting its business into two by spinning off its UK and Europe operations into a separate company called M&G while keeping Prudential PLC focused on Asia and the US.
The demerger is expected to be completed at some point between the third quarter of this year and the first quarter of next so investors are looking for an update on that front.
In terms of the financials, analysts at UBS expect Prudential to post operating profit of £2.62bn for the first half, up 9% on last year.
“This is driven by Asia £1.1bn (up 20% year-on-year , +4% vs cons), US £1.28bn (up 28% due to DAC benefit, +10% vs cons), UK £0.35bn (up 65% due to management actions, +11% vs cons), M&G £0.25bn (-8% y-o-y, in-line vs cons) and Eastspring £0.1bn (up 6% y-o-y, -4% vs cons),” they said.
The analysts predict the value of new business rose 6% to £1.89bn. The interim dividend is expected to be raised by 5% to 16.45p, representing a third of the 2018 dividend.
GVC looks for next bet after Spanish business sale
Few surprises are expected in the interim results for Ladbrokes and Coral owner GVC on Thursday, with the group having already reported a 5% increase in net gaming revenues for the period in a July update.
As has been the case for a few years now, gambling apps and websites were the big drivers, with online net gaming revenue surging 17% during the six months ended 30 June.
However, with UK retail like-for-like revenues down by 10%, investors may be hoping for any news on how the group will look to tackle stricter UK gambling laws, or at least develop other revenue streams to offset the shortfall.
Analysts at Peel Hunt are forecasting first-half EBITDA of £313mln, 10% lower year-on-year as strong performances in online and European retail are offset by the struggling UK market.
The broker has also highlighted potential risks to the group’s German market, which could potentially be subject to new regulations that limit deposits and result in lower revenues.
There may be questions around what the company plans to do with the proceeds of the €70mln sale of its 50% stake in Spanish retail betting business Sportium Apuestas Deportivas to its joint venture partner.
Admiral results to be ‘relatively flat’, says broker
Shares in Admiral Group PLC (LON:ADM) have skidded 10% lower in the past month as the motor and home insurer has faced a few bumps in the road in 2019, putting a pause on what has been an enjoyable time for investors in previous years.
With the insurance market providing a challenging backdrop due to a combination of higher claims inflation and little upwards movement in price, the UK general insurance sector has underperformed its European peers, with many analysts sellers.
However, Barclays reckons the market might be starting to turn up, giving a double upgrade to Admiral back in June, believing insurance premiums had reached an inflection point in the second quarter.
“To us this confirms the positive stance on UK motor insurers that should see cyclical tailwinds and close the performance gap to European P&C insurers,” Barclays added in July.
Shore Capital, on the other hand felt that price indices show continued declines in motor pricing, with the decline in prices “smaller than seen in 2018 but not yet at the point of price increases”.
Furthermore, last month the government raised the so-called Ogden discount rate, meaning that UK insurers will have to pay out less to people who are seriously injured in motor accidents, but the hike was smaller than analysts had suggested.
And if that wasn’t enough, the Financial Conduct Authority launched a probe into what it called the “excessive difference between premiums charged to new customers and those renewing”.
Peel Hunt expects the results to be “relatively flat”, with its main focus being on the company’s “ability to push through rate increases ahead of claims inflation”, having cut its earnings per share forecasts by 17% for the full year as it sees lower reserve releases and commission income on the back of Ogden.
The consensus forecast for the interim dividend is 56.5p.
Probe to overshadow Balfour Beatty results
Construction group Balfour Beatty plc (LON:BBY) is scheduled to published half-year results on Wednesday as uncertainty still clouds its US resident housing arm.
Balfour Beatty Communities, which operates 21 military housing bases for the US Air Force, is being investigated over reports that it falsified maintenance records at three bases, helping it earn incentive fees.
Balfour has appointed a law firm to investigate after the Air Force froze incentive fees at all 21 bases, which are worth 13% of its $33mln in annual military housing net income, until an independent review on the book-keeping has been provided.
Analysts at UBS said it believes “the key focus will be on the downside risk stemming from the issues in the US military housing portfolio”, which “could result in some modest risk to short-term profit guidance”.
Otherwise the Swiss bank does not expect material changes to the outlook, as chief executive Leo Quinn has simplified the group and continues on his turnaround strategy. UBS has pencilled in half-year revenues of £4bn and profit from operations of £81mln, including divestment gains of £15mln, with pre-exceptional profit before tax of £73mln.
Marshalls seeks to maintain solid footing at interims
Paving stone maker Marshalls will be looking to keep itself on a solid footing when it reports its interims on Thursday.
The FTSE 250 firm had said in its 2018 results in March that trading in the current year had kicked off strongly, so investors will be hoping the performance has continued over the intervening months.
The group may also be hoping for a strong comparative after the previous half-year performance was dented by severe weather conditions as the Beast from the East battered the UK with snowy weather.
Debt key for Mears
Social housing and asylum accommodation provider Mears will be looking to make good on its June trading update, which forecast a slight reduction in its net debt at its interim results on Tuesday.
There could also be an update on the integration of several business assets that Mears acquired from the property maintenance arm of facilities manager Mitie Group PLC (LON:MTO) in November, with the process scheduled to complete next month.
H&T Group expansion expected to boost results
H&T GROUP PLC (LON:HAT), the UK's leading pawnbroker, is due to publish interim results on Tuesday.
Last month the group said it was snapping up 65 stores, including 29 pledge books from competitor The Money Shop for an initial consideration of around £10.6mln.
H&T raised £6mln to finance the deal, which it expects to enhance earnings in the first full year of ownership and is a “rare and significant” opportunity to acquire a complementary portfolio of stores that have an almost identical product offering to its existing estate.
Chief executive John Nichols said that trading results in the year to date have been in line with the board's expectations.
UK jobs and inflation data eyed
Following dismal UK economic data for the second quarter, the attention now turns to jobs and inflation figures.
First up, the Office for National Statistic (ONS) releases its employment report for the three months to June on Tuesday.
Between March to May, the unemployment rate held at the lowest level since 1974 and average weekly earnings excluding bonuses grew the most since mid-2008.
However, there were signs of weakness in jobs growth as employers exercised caution amid Brexit uncertainty. Employment rose by 28,000 to 32.749mln – the weakest increase since the three months to August last year.
RBC Capital Markets said last month’s increase in employment appeared largely due to part-time self employment.
"However, while we might question its quality, employment growth remains positive, and we expect another increase in headline employment this month to keep the unemployment rate below 4% for what would be a sixth consecutive month," it said.
"However, the bigger feature of this month is likely to be a further pick-up in wage growth.
"We look for regular pay (i.e., excluding bonuses) to pick up to 3.8% 3m/yr, pushing wage growth to a level last seen in May 2008."
For the consumer price inflation data out Wednesday, RBC predicts the annual growth rate will slip from 2.0% in June to 1.8% in July.
CPI has averaged 2% since the start of the year, which is in line with the Bank of England's target.
However, economists think this steady course of inflation is unlikely to last given the recent slump in the value of the pound, sparked by hardline Brexiter Boris Johnson becoming prime minister.
The retail price index for July will also be watched closely given that it is used to determine the price hike for rail fares.
On Thursday the ONS said it had found errors in the weighting of different goods in the basket of items used in RPI.
June’s RPI rate should have been 2.8% rather than 2.9% while March’s rate of RPI should have been 2.5% rather than 2.4%, it said.
There have been calls to scrap RPI since the ONS has said for several years that it no longer gives an accurate measure of inflation.
Major announcements due:
Monday August 12:
Interims: Valeura Energy PLC (LON:VLU), Cablevision Ho. PLC (LON:CVH), Grupo CLS (LON:GCLA)
Tuesday August 13:
Interims: Caledonia Mines PLC (LON:CMCL), CLS Holdings PLC (LON:CLI), Ifg PLC (LON:IFG), Marshall Motor Holdings PLC (LON:MMH), Mears PLC (LON:MER), John Menzies PLC (LON:MNZS), Plus500 PLC (LON:PLUS), H&T GROUP PLC (LON:HAT)
Trading updates: Ethernity Net PLC (LON:ENET), Volution Group PLC (LON:FAN)
Economic data: UK jobs, US CPI
Wednesday August 14:
Interims: Admiral PLC (LON:ADM), Apax Global PLC (LON:APAX), Avast PLC (LON:AVST), Balfour Beatty plc (LON:BBY), Lookers PLC (LON:LOOK), Network International PLC (LON:NETW), Prudential PLC (LON:PRU), Bank of Georgia Group PLC (LON:BGEO), IndigoVision PLC (LON:IND), Electronica Regs PLC (LON:ELSA)
Economic data: China retail sales, China industrial production, UK CPI and RPI, Eurozone GDP, US import prices
Thursday August 15:
Interims: GVC Holdings PLC (LON:GVC), Kaz Minerals PLC (LON:KAZ), TBC Bank Group PLC (LON:TBCG), Marshalls PLC (LON:MSLH)
Trading updates: Gem Diamonds Ltd (LON:GEMD)
FTSE 100 ex-dividends: Ashtead Group PLC (LON:AHT), Anglo American PLC (LON:AAL), HSBC Holdings PLC (LON:HSBA), Royal Bank of Scotland Group PLC (LON:RBS), Segro PLC (LON:SGRO), Pearson PLC (LON:PSON), Royal Dutch Shell PLC (LON:RDSA)
Economic data: UK retail sales, US weekly jobless claims, US retail sales, Empire US manufacturing, US industrial production
Friday August 16:
Economic data: US housing starts, University of Michigan consumer sentiment