Companies Reporting: Bunzl, Prudential, Grafton Group

Our regular look at the FTSE 350 and a selection of other companies reporting from 28 August – 1 September.

• Bunzl’s half-year results come up against a tough comparable half
• New accounting rules for Prudential, but China will be in focus
• Will the tough economic backdrop see Grafton Group’s volumes fall further?

Bunzl, Half Year Results, Tuesday 29 August

Matt Britzman, equity analyst, Hargreaves Lansdown: “Bunzl has guided to 4-5% revenue growth in next week’s half-year results. Though, when you strip out the effect of currency moves and other one-off items, revenue’s expected to be broadly flat. The small amount of underlying growth seen over the first quarter looks to have reversed over the second, and guidance on operating margins points to something lower than the 7.4% delivered last year.

It’s set to be a tricky year given comparable periods benefitted from spikes in demand for a range of Covid-related products that are now normalising. Bunzl LON:BNZL sources and delivers a range of essential products, so there should be an element of resilience in demand, even if economic conditions are tough. Keep an eye out for talk on costs and price hikes, margins have been kept afloat by good management of those two factors to date.”

Prudential, Half Year Results, Wednesday 30 August

Matt Britzman, equity analyst, Hargreaves Lansdown: “Last investors heard, Prudential LON:PRU performance was being helped by the reopening of China and Hong Kong, boosting sales and demand for savings products. This is especially good news for Hong Kong operations, a key market. Due to the rising cost of medical attention, visitors to the region are highly likely to buy insurance. Half-year results next week should shed some light on how things are progressing, with the backdrop of a weaker than expected Chinese economy raising some questions.

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

Grafton Group, Half Year Results, Thursday 31 August

Aarin Chiekrie, equity analyst, Hargreaves Lansdown: “In a first-half trading update back in July, DIY retailer Grafton Group LON:GFTU reported revenue growth of 0.8% to nearly £1.2bn, ignoring the impact of exchange rates. 60.0% of Grafton’s revenue comes from Ireland, the Netherlands and Finland, which provided some welcome relief to its top line as the UK region underperformed, with revenues here shrinking 2.3%.

In its two largest markets by profit, the UK and Ireland, Grafton also experienced lower volumes and margin pressures as a result of sharp falls in timber and steel prices. Investors expect this trend to continue into the second half as commodity prices normalise and lap tough comparative periods, and next week’s results should provide more detail on just how painful this period could be. For now though, underlying operating profit guidance for the full year has been maintained at around £205m, a 28.3% drop on last year.  Any further pullback on volumes could see this guidance revised lower.”

This article has been brought to you in association with Hargreaves Lansdown. All opinions expressed in this article are from the analysts and do not necessarily represent the opinions of The Armchair Trader.

FTSE 100, FTSE 250 and selected other companies scheduled to report