Budget to dominate week ahead, Direct Line, Pennon also report

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All attention this week will be on Jeremy Hunt’s Budget speech Wednesday.

Talk beforehand has all been about balancing the books and getting finances in shape, but some of the gloom at the start of the year has lifted.

Economists are now predicting a much better outcome for the UK economy than expected, something seemingly borne out by January’s 0.3% rise in GDP.

A higher GDP feeds into a better tax take for the government, while the slump in wholesale gas prices even with the recent cold snap should also give the Chancellor more leeway and cash to play with.

All roads, though, lead to the next election, probably next year unless the UK stages a miraculous comeback, and economists expect Hunt to do a lot of pump priming this time around without a lot of action.

Company-wise, there are updates from Direct Line, Pennon and Deliveroo, while watch also the housebuilders on Monday as that’s the deadline for them to sign up to the government’s cladding remediation plan or else they might lose their licence.

Monday 13 March 

Seat belts will need to be tightened when Direct Line reports on Monday.

Penny James has already stepped aside as chief executive with a replacement yet to be found but after the grim update from rival Admiral this week candidates might be in short supply.

The insurer has already said there will be no final dividend due to its balance sheet capital coverage/solvency II ratio dropping to the lower end of its 140-180% comfort zone.

And how Direct Line can bolster this depleted capital will be a key focus on Monday (13 March) in the full-year results statement, according to broker Jefferies.

Main announcements due

Finals: Direct Line Insurance Group PLC (LSE:DLG), HG Capital Trust PLC, MTI Wireless Edge PLC, Phoenix Group Holdings PLC (LSE:PHNX)

Interims: Nightcap PLC (AIM:NGHT)

AGMs: BlackRock Energy and Resources Income Trust PLC, Hercules Site Services PLC (AIM:HERC)

Tuesday 14 March

Statements from water utility Pennon recently have been poles apart from the mood in the country where sewage dumping by all of the companies in the sector is a topic of increasing anger.

Southwest-focused Pennon has been repeatedly singled out given that most of the UK’s best beaches (in Devon and Cornwall) lie within its patch.

Recent news that the water companies in England and Wales will this year impose their largest bill increases in close to two decades is unlikely to help the mood though the price hikes will be well below inflation. 

Bills will go up an average of 7.5% to £448 a year from April, according to Water UK, with higher energy costs one reason for the price increase.

Any change in dividend policy (unlikely) will be investors’ main focus.

US core inflation meanwhile will dominate market thinking especially after Fed Chair Jerome Powell’s hawkish comments this week.

Consensus forecasts are for an unchanged read of 5.6% or at best a slight dip to 5.5%.

Major announcements due

Finals: Genuit Group PLC (LSE:GEN), Gresham Technologies plc (LSE:GHT), Harworth Group PLC, Midwich Group PLC (AIM:MIDW), YU Group PLC

Interims: Aptamer Group PLC (AIM:APTA), Close Brothers Group PLC (LSE:CBG), Eagle Eye Solutions Group PLC (AIM:EYE), Litigation Capital Management Limited, Pci-Pal PLC, Virgin Wines UK PLC (AIM:VINO)

Trading updates: Pennon Group PLC (LSE:PNN, OTC:PEGRY), TP ICAP Group

AGMs: MTI Wireless Edge PLC, RedX Pharma PLC

Economic announcements: Claimant Count Rate (UK), Unemployment Rate (UK), Consumer Price Index (US)

Wednesday 15 March

Chancellor Jeremy Hunt will present his latest Budget next Wednesday, 15 March, with businesses and households hopeful for some helpful measures on energy bills and elsewhere, though the government has been keen to emphasise its ‘fiscal responsibility’.

The spring speech will also be accompanied by updated fiscal and economic forecasts by the Office for Budget Responsibility (OBR), which economists expect to show some positive changes.

One casualty already has been the northern heading extension of HS2 and that will probably be commented on by contractor and rail maintenance group Balfour Beatty, which is heavily dependent on government infrastructure.

Jefferies was sanguine about the impact of the two-year delay of phase 2a of HS2 on Balfour

“For Balfour Beatty, we see limited impact from this announcement given 1) its contracts are fee-based and protected against cost inflation, 2) phase 2a is not currently in its order book and 3) there is a deep pipeline of UK infrastructure projects ahead.”

Re-iterate ‘Buy’ said the broker.

HS2 is the largest infrastructure project in Europe and Phase 1 is due to complete between 2029-2033.

Major announcements due

Finals: 4imprint Group Plc (AQSE:FOUR), Advanced Medical Solutions Group (AIM:AMS) PLC, Balfour Beatty plc (LSE:BBY), Ferrexpo PLC (LSE:FXPO), Foresight Solar Fund Ltd (LSE:FSFL), Keywords Studios PLC (AIM:KWS, OTC:KYYWF), Marshalls PLC (LSE:MSLH), MaxCyte Inc (AIM:MXCT), Prudential PLC (LSE:PRU)

Interims: Kin and Carta PLC

Trading updates: IG Group Holdings

AGMs: BSF Enterprise PLC, Chemring Group (LSE:CHG) PLC, Katoro Gold PLC (AIM:KAT), Safestore Holdings (LSE:SAFE) PLC

Economic announcements: MBA Mortgage Applications (US), Producer Price Index (US), Retail Sales (US), Retail Sales Less Autos (US), Business Inventories (US), Crude Oil Inventories (US)

Thursday 16 March

Helios Towers is expected to underline strong revenue growth in its results for the year ending December 31, 2022 on Thursday

Following a strong third quarter and noting a “robust” commercial pipeline, the Africa-focused telecoms towers operator raised its tenancy guidance to between 1,400 and 1,700 units (previously between 1,200 and 1700).

However, increased power prices are expected to result in an Adjusted EBITDA margin guidance of 50-51%, down from 53.6% in 2021.

Although rising bond yields may prove a headwind on the group’s share price in the short term, analysts maintain a buy rating at a 170p price target.

Thursday is also a big ex-dividend day, with NatWest, M&G, Haleon, Anglo American, Segro and CRH all trading without their latest payout, something expected to knock around 10 points off FTSE 100 at the open.

Major announcements due

Finals: Bridgepoint Group PLC (LSE:BPT), Capital Limited (LSE:CAPD) PLC, Centamin PLC (LSE:CEY, TSX:CEE, OTC:CELTF), Deliveroo PLC (LSE:ROO), Empiric Student Property PLC, Eurocell PLC (LSE:ECEL), Gem Diamonds Ltd, Gym Group PLC, Helios Towers PLC (LSE:HTWS), OSB Group PLC (LSE:OSB), PensionBee Group PLC (LSE:PBEE), PYX Resources Ltd (LSE:PYX, NSX:PYX), Rentokil Initial PLC (LSE:RTO), Restore Plc (AIM:RST), Savills PLC (LSE:SVS), TI Fluid Systems PLC (LSE:TIFS), WAG Payment Solutions PLC (LSE:WPS)

Interims: Gelion PLC (AIM:GELN)

Trading updates: Halma PLC (LSE:HLMA), Investec PLC (LSE:INVP)

AGMs: Athelney Trust PLC (AIM:ATY)

Economic announcements: Building Permits (US), Continuing Claims (US), Housing Starts (US), Import and Export Indices (US), Initial Jobless Claims (US), Philadelphia Fed Index (US)

Ex-dividend: NatWest Group, SEGRO, Anglo American, Haleon, CRH

Friday 17 March

Things quieten down on Friday with the Michigan index of consumer confidence the most noteworthy piece of economic data.

Consensus is for the number to be little changed, however, at 67.

AGMs: Chrysalis Investments Limited

Economic announcements: Capacity Utilisation (US), Industrial Production (US), U. of Michigan Confidence (Final) (US)

US company announcements

Wednesday: Adobe

Thursday: Signet Jewelers, FedEx (NYSE:FDX)

Friday: XPeng

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