Week Ahead

Abrdn investors seek guidance, Weir on a roll

Stephen Bird
Stephen Bird: clear path

There are those who argue that Scotland’s standing in the financial services sector is more precarious than its cheerleaders like to believe.

The loss of head offices of banks, insurance and pensions companies has taken its toll and speculation that Abrdn could be the next to topple risks delivering another blow.

Talk of a break up or takeover has dogged the Edinburgh-based company since the merger of Standard Life and Aberdeen Asset Management and its controversial rebranding.

Assets under management have fallen by 1% to £495 billion over the past year, fee margins are under pressure and a share buyback has been instigated as a means to bolster a badly flagging share price.

The company is now valued at just £3bn compared with £11bn at the time of the 2017 merger which promised to create a Scottish champion.

The offloading of the Standard Life business and brand to Phoenix was seen as a means of tidying up the group, setting it on a new and clearer path. Other businesses have been dismantled or reorganised.

However, the market sees an incongruous mix of asset management and retail stock picking tools acquired at the top of the cycle and now worth considerably less.

Amid staff cuts and senior management changes Stephen Bird insists the best is yet to come and will doubtless repeat the message on Tuesday when he unveils full-year results.

There will also be full-year figures from Taylor Wimpey which will provide a further assessment of the housing sector. Last year was tough for all housebuilders amid rocketing interest rates. With inflation falling and interest rates expected to follow, conditions have improved and other builders have posted signs of an upturn. Barratt’s acquisition or Redrow has sparked a round of speculation about further consolidation.

Weir Group will post annual results on Thursday and has been on an upward trajectory. Its earnings over the next few years are expected to increase by 25%, indicating a highly optimistic future ahead. This should lead to more robust cash flows, feeding into a higher share value.

The company, which The Herald still likes to call a “Scottish engineering giant”, now terms itself a mining technology company and has no manufacturing activities north of the border. It has 12,000 employees in 60 countries but employs only about 150 people in its head office in Glasgow and in its advanced research centre. 

Chief executive Jon Stanton told investors at a capital markets day in December that the company has been “on a journey to sustainably higher margins and is on track to deliver an operating margin of 17% this year.”

DIARY

Monday 26 February

  • Full-year results from Bunzl

Tuesday 27 February

  • Full-year results from Smith & Nephew, UNITE, Senior and Abdrn
  • Chinese one- and five- year interest rate decisions
  • BRC UK shop price index

Wednesday 28 February

  • Full-year results from Reckitt Benckiser, Taylor Wimpey, St James’s Place, Aston Martin Lagonda and Primary Health Properties
  • Nationwide UK house price index

Thursday 29 February

  • Full-year results from London Stock Exchange, Haleon, Schroders, Ocado, Weir, Howden Joinery, Shaftesbury Capital, Mobico, Spectris, Serco, Drax and Vesuvius

Friday 1 March

  • Full-year results from Pearson, Rightmove, IMI, Nichols, Funding Circle and Capital & Regional
  • Purchasing managers’ indices (PMIs) for manufacturing from Asia, Europe, the UK and the USA
  • EU flash inflation


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