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Tuesday preview: Ferguson, Ladbrokes, AG Barr results, Facebook whistleblower evidence

By Oliver Haill

Date: Monday 26 Mar 2018

LONDON (ShareCast) - (ShareCast News) - Tuesday brings updates from the likes of AG Barr, Ladbrokes-Coral and United Utilities, with investors in all three nervous to varying degrees about future government action, while interims from Ferguson should bring news of a special dividend.
Investors in Facebook may be watching parliament too, as the Cambridge Analytica story develops further with an appearance by whistle-blower Christopher Wylie to give evidence to the House of Commons: Digital, Culture, Media and Sport Committee from 10.30am. The DCMS committee will ask Wylie about his role with Cambridge Analytica as former Director of Research and subsequent events.

Size-wise, Ferguson is the biggest UK corporate news on Tuesday, with investors hoping to hear about plans to return capital though not expecting any major operational shifts at this half-year stage from the plumbing products company formerly known as Wolseley. Earlier this month, the company cleared the final regulatory hurdle to sell its Nordic-based Stark unit as it as it focuses on its dominant US arm, which will net €1bn.

In the first quarter, US like-for-like sales were running at 8.3% giving rise to 10% growth in group revenue, with the UK lacklustre as management's transformation programme continues Trading profit was up 13.9%, with gross margin of the ongoing business slightly improved at 29.0%.

"Since the end of the quarter organic revenue growth has been broadly in line with the first quarter," was the comment from chief executive John Martin. "The group expects trading profit for the full year to be in line with current analyst consensus expectations."

Broker Numis expected trading patterns for residential and commercial markets to remain good and industrial Improving, along with UK likely to have remained lacklustre, Canada and Central Europe recovering.

"We believe the focal point of the results will be strength of the balance sheet - with the Nordic businesses now sold, we believe Ferguson will be nil geared. This is prompting discussion about acquisitive growth potential coupled with share buyback, both of which are likely to be positively regarded by the investment community."

UBS forecasts Q2 organic sales growth of 7.5% with the US up 8.5%, with first-half EBITA of $688m, adjusted PBT of $660m and adjusted EPS of $1.9 and DPS of $0.53.

"We expect an update on exit rates in the US given tougher comps in H2 (we expect +5.3% H2 organic growth in the US) and plans to return capital from the sale of the Nordic operations."

Ladbrokes has been in the news of late as the government umms and ahhs over how tough to get in its crackdown on fixed-odds betting terminals.

"Ladbrokes has been able to withstand this better than most due to a decent performance from its sports betting business which has seen decent outperformance on revenues in recent quarters," said market analyst Michael Hewson at CMC Markets.

"With a summer of sport on the horizon, including the football World Cup and the recent decision by the gambling regulator to propose a watering down of proposals to reduce maximum stakes on fixed odds betting terminals, the outlook seems a lot more positive than it was a few weeks ago. This is a likely to be a relief for shareholders, however with the share price already close to four year highs, there is a risk that most of the good news is already in the price."

Irn Bru maker AG Barr's industry is also a headline-maker from a government clampdown, on sugar this time. The soft drinks industry is facing an April introduction of a tax on drinks with higher sugar contents.

With drinks containing 5-8g of sugar per 100ml due to face an 18p per litre charge, with a charge of 24p per litre on those with more than 8g, the Scottish company has responded by reformulating its products to lower sugar recipes so that 99% of the portfolio will be exempt from the new levy.

"Given that Barr's portfolio contains the famously sugary Irn-Bru, that's a major achievement," said Nicholas Hyett at Hargreaves Lansdown. "However, there have been concerns that the reformulated drinks could alienate the group's legions of fans. The new Irn-Bru formula was introduced in January, and the February trading update suggested it had been well received. However, it's vital that early performance continues. Commentary around ongoing Irn-Bru sales will be critical in next week's full year results."

For United Utilities, the threat from potential regulatory issues has led to poor share price performance over the last 10 months.

"Investors who normally expect little in the way of excitement from trading updates will be looking closely for signs of management defending the sector as well as comments regarding future dividends," said Graham Spooner at The Share Centre.

MACROECONOMIC DATA

The EU Economic Sentiment Indicator will be among the more significant data nuggest on quite a slow day for macro news.

The recovery in the industrial sector has slowed, suggesting that the Economic Sentiment Indicator likely fell to about 108.5 in March, from 109.5 in February, said Pantheon Macroeconomics.

Stateside things will be a little more busy, as there's a barrage of second-line economic indicators, including prints on personal income and spending for February, together with readings on consumer confidence from the University of Michigan and MNI Chicago factory sector PMI.

Tuesday March 27

INTERNATIONAL ECONOMIC ANNOUNCEMENTS

Business Climate Indicator (EU) (09:00)

Consumer Confidence (EU) (10:00)

Economic Sentiment Indicator (EU) (09:00)

Industrial Confidence (EU) (09:00)

M3 Money Supply (EU) (08:00)

Services Confidence (EU) (09:00)

UK ECONOMIC ANNOUNCEMENTS

CBI Distributive Trades Surveys (11:00)

FINALS

Alliance Pharma, Bank of Cyprus Holdings Public Limited Company, Barr (A.G.), Billington Holdings, Biome Technologies, Clarke (T.), DP Poland, e-Therapeutics, Elecosoft, Gulf Marine Services, Moss Bros Group, Nostrum Oil & Gas , S&U, Scisys, STM Group, Touchstone Exploration Inc NPV (DI)

ANNUAL REPORT

Aviva, Bank of Cyprus Holdings Public Limited Company

AGMS

Amino Technologies, One Media IP Group, Quartix Holdings

TRADING ANNOUNCEMENTS

United Utilities Group

INTERIMS

Earthport, Ferguson, James Halstead, Orchard Funding Group

INTERIM DIVIDEND PAYMENT DATE

BHP Billiton