FTSE reshuffle and Avon Rubber results key news for Wednesday; US ADP jobs data eyed

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The mid-point of the week will see a lighter company calendar, with final results from Avon Rubber and the latest quarterly reshuffle of the FTSE indices likely to be the events drawing investor attention.

Meanwhile, the macro calendar will be dominated by the US ADP jobs data, which is often considered a precursor to the all-important non-farm payroll figures due on Friday.

Avon Rubber expects profit bounce

Wednesday will bring full-year results from Avon Rubber PLC (LON:AVON), with the FTSE 250 maker of respiratory protection systems heading into 2021 as a more focused entity following the sale of its dairy and milking equipment business.

The company has had a strong run in 2020, boosted by several contract wins as well as a £100mln acquisition of US helmet specialist Team Wendy, which analysts thing nicely compliments the group’s existing capabilities of making respirators for soldiers and first responders.

As a result, expectations from investors are likely to be high when the firm unveils its figures, with forecasts predicting an adjusted pre-tax profit of £38.8mln, up from £31.4mln in 2019. Any guidance for the coming year will also be watched closely as analysts are already predicting a profit for the coming year of just over £50mln.

As always, the dividend will also be in focus, with Avon having yet to break a decade long streak of hiking its annual divi. The interim payment rose 30% to 9.02p per share, while the final payment is predicted to increase 38% to 28.7p.

FTSE does the (re)shuffle

The close of trading on Wednesday will also bring the latest quarterly reshuffle of the FTSE 100 index, with some analysts predicting that Homeserve PLC (LON:HSV) could be the latest firm to see itself booted out of the blue-chips.

“Homeserve’s star shone brightly during the early stage of the pandemic which pushed it into the FTSE 100 limelight. With so many people at home to use and break appliances, demand for repairs and renovations amongst its growing customer base rose. But with mass vaccine rollouts on the horizon, its appeal has dimmed, with expectations the stay at home trend will be on the wane”, said Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown

In terms of potential joiners, hedge fund manager Pershing Square Holdings Ltd (LON:PSH) and engineering firm Weir Group PLC (LON:WEIR) have been tipped as prime candidates to replace Homeserve.

Meanwhile, further down in the FTSE 250 shopping centre owner Hammerson PLC (LON:HMSO) is also expected to be relegated.

“Hammerson was already dragging its feet, even before the pandemic took hold, weighed down by its bricks and mortar retail portfolio. With lockdowns closing its shopping centres and the shift to digital accelerating during the crisis, it hurt Hammerson hard, pushing it to the brink of collapse. That was avoided through a £552 million rights issue, but the owner of London’s Brent Cross centre and Birmingham’s Bullring, isn’t likely to avoid relegation from the FTSE 250”, Streeter said.

“Although the vaccine breakthroughs have helped the shares make an abrupt turn upwards, stark worries remain about whether footfall will return to pre-pandemic levels, or whether the way we shop has changed forever. It struggled to collect rents in the Autumn and plans under government consideration to scrap tax free shopping for overseas visitors could be another blow, given that its venues like Bicester shopping centre are highly reliant on international tourists.’, she added.

Significant announcements for Wednesday December 2:

Interims: Loungers PLC (LON:LGRS), Augmentum Fintech Plc (LON:AUGM)

Finals: IXICO PLC (LON:IXI), Stock Spirits Group PLC (LON:STCK), Avon Rubber PLC (LON:AVON)

Economic data: US ADP jobs data

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