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Sirius Minerals vote and US jobs key events for next week as results and data flow in shadow of coronavirus

The coming week will also bring the latest FTSE indexes reshuffle alongside figures from household names such as Greggs and ITV

NMC Health PLC -

The coming week will bring a number of significant events, alongside the continued delivery of results from some of the market's big players, although investors are likely to keep most of their attention on just how much damage the coronavirus outbreak can do to global markets.

The first week of March will bring a smattering of economic data in the form of UK and US manufacturing and services purchasing managers indexes (PMIs) on Monday and Wednesday respectively, but the main event will be the all-important US non-farm payrolls on Friday.

The jobs figures are unlikely to beat last month’s figures, which surpassed expectations by adding 225,000 jobs in January thank to unseasonably warm weather. This time around, though, the coronavirus is likely to have restrained hiring activity among US firms as they focus on trying to shore up their existing business until the outbreak subsides

FTSE reshuffle quiz

Meanwhile, with the virus causing a bloodbath for equities, the question of who exactly will be demoted from the FTSE 100 index in the latest quarterly reshuffle next week is anyone’s guess.

The prime candidate for demotion is NMC Health (LON:NMC), which has lost around two-thirds of its value since last summer after a report by short-seller Muddy Waters questioned its accounting policies, setting off a chain of events that has resulted in the resignation of all the company’s executives and the sacking of its CEO amid questions over its shareholder register.

Others that analysts have earmarked as potential casualties are B&Q DIY stores owner Kingfisher plc (LON:KGF) and travel firms TUI AG (LON:TUI) and easyJet PLC (LON:EZJ) which have been hit in recent weeks by coronavirus disruption.

Meanwhile, potential candidates for promotion are silver miner Fresnillo Plc (LON:FRES), housebuilder Bellway PLC (LON:BWY) and asset manager Intermediate Capital Group PLC (LON:ICP).

Getting Sirius

While in the US, primary voters across several states will be choosing their preferred presidential candidates, London will be getting it's very own ‘Super Tuesday’ as Sirius Minerals PLC (LON:SXX) investors vote on whether to approve the controversial £405mln takeover bid for the potash miner from Anglo American plc (LON:AAL).

While the board has recommended investors approve it, half of Sirius shareholders are private investors who bought shares at a much higher price and claim the offer “significantly” undervalues the company.

The offer has also attracted criticism from one of Sirius’ largest shareholders, hedge fund Odey Asset Management, which last week said the bid “does not represent fair value for shareholders” and reckons Anglo “would be willing to bid substantially more”.

With Odey having increased its stake in Sirius to 1.51% and another band of private investors looking to raise £460mln in a bid to stop Anglo’s takeover, the outcome of the vote will likely rest in the hands of the company’s 85,000 retailer shareholders, many of whom live close to the project site in Yorkshire.

What’s cooking for Greggs?

High street bakers Greggs PLC (LON:GRG) had a stellar year in 2019, and is forecasting profits slightly higher than expectations even after dishing out a special £7mln thank-you payout to all employees.

Investors are likely to be excited about the full-year results coming out on Tuesday, however, the year ahead comes with tough comparatives as like-for-likes have jumped 12.6% over two years.

Analysts at HSBC are expecting staff costs and higher pork prices to dent future sales, even though an increasing vegan offering is what the FTSE 250-listed firm thinks has been the key to its success.

However, Greggs management are mindful of upcoming headwinds and the group is planning to open 100 more stores this year, as well as extending trials for longer trading hours and for making delivery more widely available.

Just last month the firm clinched a partnership deal with Just Eat Takeaway.com (LON:JET) to deliver its ‘fake bakes’ and breakfast deals UK-wide.

Investors tune in to ITV

Finals from broadcasters ITV PLC’s (LON:ITV) finals on Thursday may update investors on the future of Love Island after the recent tragedy of former presenter Caroline Flack's death has shed a negative light on the show.

According to media reports, the first episode following Flack’s death recorded 1.9mln viewers as opposed to the series high of 2.4mln.

The TV channel has also reportedly opted to cancel the usual spin-off showing a reunion of the winter participants.

The reality show, which has been driving performance last year, is still on for next June.

Another element of interest will be the recently launched streaming service joint venture with the BBC, BritBox, which competing against giants such as Netflix, Amazon Prime and the upcoming Disney+.

“With the share price falling back to pre-election levels investors will be hoping for continued improvement in its online offering and costs,” analysts at the Share Centre said.

L&G kicks off insurers reporting

It will also be the turn of a pair of life insurance giants to announce annual results this week.

First up will be Legal & General Group PLC (LON:LGEN) on Wednesday amid a period of increased market volatility and investor concerns about low interest rates, falling bond yields and rising credit spreads.

In the first half of last year, L&G reported an 11% jump in profits after securing the UK’s largest bulk annuity deal, with 33,000 Rolls-Royce pensioners moved over in June.

However, other business lines were below market expectations, according to analysts at Hargreaves Lansdown.

In a November update, L&G estimated that its all-important solvency ratio will be in a range of 171% to 176% by the year-end.

Analysts at UBS expect that around a nine-percentage-point fall in L&G's Solvency II ratio will put concerns about this metric “back in focus” as it is “driven by a combination of falling bond yields, rising credit spreads and weaker equity markets” though it noted that this was “not at a level that would risk the dividend, in our view”.

However, taking a cautious view of the UK insurance subsidiary, the analysts warned that if low bond yields persist and joined by more normalised credit conditions, there is the potential to create “constraints to cash” at the group level — ie put pressure on the dividend — or lead to changes to annuity new business volumes and/or reinsurance strategy.

But since falling to a two and a half year low last August, L&G’s shares soared to an all-time high in February before coronavirus concerns struck markets.

Asia-focus for Aviva

It’s a bit of a different story for Aviva PLC (LON:AV.), where finals on Thursday come with the shares back down around the six-year lows seen last summer, and a strong focus on Asia that will mean the update is closely watched.

Chief executive Maurice Tulloch, who was only promoted last March, unveiled his strategic vision for the life insurer in November that was less aggressive than some investors were hoping.

Having reversed his predecessor’s plans to combine the life and general insurance businesses, Tulloch decided not to sell Aviva’s Chinese business but instead exit its Hong Kong joint venture and continue mulling options for its operations in Hong Kong, Vietnam and Indonesia.

Analysts at Barclays said Aviva was “growing slowly and has no obvious catalysts”, with excess distributions to shareholders “significantly less likely”.

Aviva and L&G both have general insurance arms that will also make events in the first couple of months of 2020 interesting with regards to floods claims in the UK.

Admiral motoring

Two general insurance specialists also have results next week.

In its pre-close trading update in early February, Admiral Group PLC (LON:ADM) said motor insurance would be the key to annual profits being higher than expected.

The FTSE 100-listed group said profit before tax for 2019 will be in the range of £510-540mln due to elevated levels of injury claims from road accidents after the government changed the ‘Odgen rate’, the amount of discount applied to compensation paid to victims of life-changing injuries.

Thanks to this, and a “strong” solvency position, Admiral has said it will propose a final dividend in the range of 73-78p per share but warned that profitability in 2020 would be hit by the higher levels of claims inflation during 2019 and as a result, Admiral expects its loss ratio to be higher than recent years.

Direct Line rings up numbers

Direct Line Insurance Group PLC (LON:DLG) has also been in the news recently, with headlines saying it is getting rid of 800 staff, or 7% of its workforce.

This follows an update in November where Direct Line announced plans to improve its operating expense ratio to 20% by the end of 2023 through a mixture of increasing automation, self-service and digitalisation.

This spending on technology is likely to see capital expenditure in the region of £175mln for 2019, with the changes designed to reduce annual capex to less than £100mln from 2022 onwards.

Direct Line said trading since the middle of the year has shown signs of improvement, with gross written premiums in the third quarter to £858.0mln, roughly flat on last year as modest growth in motor offset a fall from home insurance.

What’s the takeaway for Domino’s?

Domino’s Pizza Group PLC (LON:DOM) is expected to deliver a set of final results in line with the dismal expectations it set out last month.

The fast-food chain has been struggling in its international arms - namely Norway, Sweden, Iceland, Switzerland and Germany - culminating in a giveaway of its Norwegian business.

In a fairly unusual deal, the FTSE 250-listed group had to pay two existing minority shareholders to take over the loss-making Norwegian stores, for an estimated total cost of £10mln.

That will be an extra impairment to be factored in this year, where net debt is already expected to be just above guidance at £233mln.

Investors are looking to hear about franchisee profits as well as margins at the supply centre, while analysts at Peel Hunt see potential to boost performance in the UK once new management is appointed.

The company has been searching for an interim chief financial officer after the tragic passing of David Bauernfeind over the Christmas holidays.

It is also looking for a new chairperson, which will be followed by the recruitment of a new chief executive as David Wild announced last year he would step down.

Crunch time for Intu

Shopping centre owner Intu Properties PLC (LON:INTU) will deliver its full-year results on Thursday, however, investors are more likely to be wanting an update on the status of the group’s £1.3bn fundraising plans as it struggles to shore up its balance sheet amid an ongoing fall in the value of its portfolio.

The company’s plans were thrown into disarray earlier in February after Hong Kong property group Link had pulled out of talks around the fundraising.

Investors will likely be looking out for any news that the company has managed to secure another partner to take Link’s place or whether parties already backing the fundraising, including major Intu shareholder Peel Holdings, will be willing to inject more cash into the business.

The company could also provide details of more disposals as it looks to cut down its £5bn debt pile.

Coronavirus and trade war loom large for Intertek

Safety testing and quality assurance firm Intertek Group PLC (LON:ITRK) will deliver its full-year results on Tuesday, and the numbers are expected to be reasonable with a revenue jump of around 7%.

However, investors will be keeping a close eye on the company’s outlook for the first quarter of 2020 as the coronavirus outbreak has the potential to slow demand for its services.

There are also lingering concerns that the US-China trade war could have affected the previous year’s numbers.

US sale chatter eyed at Melrose

Investors in turnaround specialist Melrose Industries PLC (LON:MRO) may be less interested in the group’s final results on Thursday than they will be on whether the company confirms rumours that it is considering the sale of its US business Nortek.

A sale of Nortek could provide the firm with more time to turnaround UK engineering group GKN, which it acquired through a hostile takeover in 2018.

Attention will also be on the viability of the GKN business as signs of pressure continue to mount for the global economy.

Significant announcements expected for week ending 6 March:

Monday 2 March:

Finals: Senior PLC (LON:SNR), Hiscox Ltd (LON:HSX), Greencoat Renewables PLC (LON:GRP), Johnson Service Group plc (LON:JSG)

Interims: PCI-PAL PLC (LON:PCIP)

Economic data: UK manufacturing PMI, US manufacturing PMI

Tuesday 3 March:

Sirius Minerals takeover vote

Finals: Greggs PLC (LON:GRG), Direct Line Insurance Group PLC (LON:DLG), 4Imprint Group PLC (LON:FOUR), Apax Global Alpha Limited (LON:APAX), Cairn Homes plc (LON:CRN), Getbusy PLC (LON:GETB), Hutchinson China Meditech Ltd (LON:HCM), Ibstock Plc (LON:IBST), Intertek Group PLC (LON:ITRK), Rotork PLC (LON:ROR), Signature Aviation PLC (LON:SIG)

Interims: Craneware PLC (LON:CRW)

Trading announcements: Ashtead Group PLC (LON:AHT)

Wednesday 4 March:

Finals: Legal & General Group PLC (LON:LGEN), Attraqt Group PLC (LON:ATQT), BATM Advanced Communications Ltd (LON:BVC), Devro PLC (LON:DVO), Elementis plc (LON:ELM), Hill & Smith Holdings PLC (LON:HILS), Hostelworld Group PLC (LON:HSW), Polymetal International PLC (LON:POLY), Vivo Energy PLC (LON:VVO)

Interims: Allergy Therapeutics PLC (LON:AGY), Gfinity PLC (LON:GFIN)

Trading announcements: DS Smith plc (LON:SMDS)

Economic data: UK services PMI, US services PMI, US non-manufacturing PMI, US ADP employment,

Thursday 5 March:

Finals: ITV PLC (LON:ITV), Intu Properties PLC (LON:INTU), Aviva PLC (LON:AV.), Admiral Group PLC (LON:ADM), Domino’s Pizza Group PLC (LON:DOM), GVC Holdings PLC (LON:GVC), Melrose Industries PLC (LON:MRO), Spire Healthcare Group PLC (LON:SPI), PageGroup PLC (LON:PAGE), Premier Oil PLC (LON:PMO), Dairy Farm International Holdings Ltd (LON:DFI), Franchise Brands PLC (LON:FRAN), Gresham House PLC (LON:GHE), Headlam Group PLC (LON:HEAD), Hong Kong Land Holdings Ltd (LON:HKLD), IndigoVision Group plc (LON:IND), Jardine Matheson Holdings Ltd (LON:JAR), Mandarin Oriental International (LON:MDO), Schroders PLC (LON:SDR), Spirent Communications PLC (LON:SPT), Tyman PLC (LON:TYMN)

Interims: Kier Group PLC (LON:KIE)

FTSE 100 ex-dividends to knock 4.09 points off the index: BHP Group PLC (LON:BHP)

Economic data: US weekly jobless claims

Friday 6 March:

Finals: SIG PLC (LON:SHI), Global Ports Investments PLC (LON:GLPR)

Economic data: US non-farm payrolls, US balance of trade, UK house prices

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