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Monthly market outlook: March 2018

March 2018

Tags: Macro Economics

Tom Sieber from Shares Magazine provides his monthly market outlook for the month of March.


Funerals provider Dignity (DTY) has work to do to get investors back on side when it reports its 2017 numbers on 14 March. In January, the company announced a radical overhaul of its pricing structure, which led to significant downgrades for profit expectations. In the face of mounting competition the company decided to hold the average price of its traditional full service funeral at £3,800 and to reduce the cost of its simple funeral from an average of £2,700 to £1,995 (£1,695 in Scotland).

These new pricing points are in line with those of the Co-Op. Dignity currently believes this will increase the proportion of simple funerals it carries out from 7% in 2017 to 20% to 2018, creating a double whammy effect. Essentially, the pricing amendments mean Dignity’s debt position compared to its forecast earnings is now at a much higher level, leading some investors to worry about its ability to
service the debt.

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Supermarket Morrisons (MRW) is scheduled to release its full year results on 14 March. The company proved a Christmas winner, like-for-like sales surging 3.7% higher in the six weeks to 7 January 2018. The market will be looking for signals thatthis momentum has been maintained following the conclusion of the festive period.
Management may also be keen to highlight an emerging opportunity in wholesaling. The company already has a tie-up with Amazon, as part of the US firm’s incursion into UK online grocery delivery, and recently began supplying McColl’s (MCLS) convenience stores with products under the Safeway brand.

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On 14 March global insurance business Prudential (PRU) announces its results for the 12 months to 31 December 2017. The company’s recent growth has been driven by developing markets in Asia. Prudential says that ‘by 2020, the spending of the middle class in the Asia-Pacific region is expected to surpass that of the US and Europe combined.’
These trends have led to growing speculation the company might exit its operations in the UK. Just over a year ago the company withdrew entirely from the UK annuities market and, in August 2017, it merged its M&G asset management arm with its other UK businesses to create M&G Prudential. By packaging up these assets it could make them easier to sell. Such a move would allow management to focus on Asian growth opportunities and its US life insurance company, Jackson, which is enjoying strong growth due to supportive demographics across the Atlantic.

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Writer: Tom Sieber Tags: Macro Economics

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