Next week in the City: Prudential, Bunzl and Grafton

By: Charlie Conchie

Despite an August lull taking hold of the corporate calendar, a host of big names are set to update City investors next week with their latest trading numbers including Prudential, Bunzl and Grafton.

Prudential

Among the biggest players reporting in the week ahead is insurance giant Prudential which will be looking to provide some reassurance to shareholders after a slight drift in its share price over the year so far.

Jitters have spread against the backdrop of a faltering Chinese economy with around 50 per cent of the group’s projected business hailing from the region.

New chief Anil Wadhwani, who took over the reins in February, will be looking to ease those nerves with a rosier update this week.

“Looking further ahead, the Asian business should benefit from long-term economic development in its markets, driving increased demand for Pru’s insurance products since in many cases, state-sponsored social security has never got off the ground,” says Matt Britzman, equity analyst at Hargreaves Lansdown.

“A focus on regular premium products like life and health insurance should hopefully make profits reasonably dependable although of course there are no guarantees.”

The firm has also been beset by boardroom turmoil in the past few months after finance chief James Turner resigned in May following an investigation into a recruitment matter showed he had fallen short of its standards.

Bunzl

Sprawling outsourcing and logistics giant Bunzl is also hoping to breathe some life into its share price as the firm trades near 12 month lows.

The firm is set to update the City with its half year results on Tuesday and investors will be keen to see whether a price increases will squeeze profits.

Analysts are looking for sales of £12.1bn in the full year 2023, against £12bn in 2022.

In the first half a year ago, Bunzl generated revenues of £5.7bn and analysts have pencilled in £6bn for the first six months of 2023.

“Bunzl’s business model is a very resilient one. It supplies the things that other firms need in order to do business, but not items they would sell to their customers,” said Russ Mould, head of investment analysis at AJ Bell.

“For example, it supplies disposable coffee cups to cafes, food wrap to supermarkets, hard hats to builders, and cleaning materials, bandages and rubber gloves to hospitals.

“The required nature of the products it provides may shelter the firm from the vagaries of the economic cycle, at least to some degree, and also provide Bunzl with pricing power, a key ingredient during inflationary times.”

Grafton

Shares in Irish homeware retailer Grafton have plunged some 40 per cent below their all-time high amid a tricky time for retailers, but new chief Eric Born is looking to provide some relief to the City with its latest set of numbers.

The London-listed FTSE 250 retailer has not dished out a profit warning since Born took over in November and trading updates in May and July have not prompted downgraded to consensus earnings forecasts.

“Given the prevailing gloom over the UK economy – and the housebuilding and DIY markets in particular, in light of inflation, soggy consumer confidence and rising interest rates – it is of little surprise that Grafton’s shares are trading some 40 per cent below their 2021 all-time high, when the DIY boom was in full flow and the UK housing market was still drawing support from the stamp duty tax break and Help to Buy,” added AJ Bell’s Mould.

“Management is even running a third, £50m share buyback programme so it will be interesting to see if the first-half results statement is accompanied by any change in tone or outlook,” he added.

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