Market Prognosis

A concise summary of the major macro events of the past 24 hours, and selected UK company-specific news.

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March 6, 2024

US data more consequential than UK Budget

Macro

Powell testifies to Congress today. We also get US job openings data and the UK’s budget speech. The UK budget is a sideshow compared to the US updates, which should provide critical input regarding the path of inflation and the outlook for dollar rates.

China’s Peoples’ Congress policy meeting announced a 5% growth target for 2024. A few years ago, most investors would be disappointed with 5%; today, most believe this figure is a stretch target.

UK Companies

Convatec reported accelerating revenue growth across all four chronic care categories, with solid profit and cash generation. It is raising medium-term organic revenue growth expectations to 5-7% p.a. (previously 4-6%). 

Ibstock reported its revenue was down 21% to £406m, in line with UK domestic brick deliveries. Its closing net debt was £101m. It is reducing fixed costs to align capacity to near-term demand. The early weeks of 2024 have been in line with the subdued levels seen in the latter part of 2023. Ibstock remains confident in its ability to respond to market conditions and deliver strong growth and continued cash generation over the medium term as markets recover. 

Flooring distributor Likewise updated that sales revenue to the end of February has increased by 11.5% and is confident in meeting market expectations for 2024. Its ongoing investment in Sales Teams, Products, and point-of-sale displays will continue to expand its market share. The logistics infrastructure the Group has created over the last three years is now very well-positioned to process and meet increasing demand.

This statement’s optimistic tone contrasts with Headlam’s yesterday. Likewise CEO, Tony Brewer, ran Headlam, the UK market leader, before leaving to establish Likewise in 2016. 

Rathbone said it is well positioned to achieve a 30%+ operating margin three years after the completion of the Investec Wealth combination (i.e., September 2026). However, it now expects to be at mid-20s% margins in 2024 due to the continuing investment in its digital programme, the time required to complete the migration of clients, and the impact of ongoing inflationary pressure. 

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