Langton Capital – 2016-05-13 – Coca Cola HBC, London hotels, boardroom pay & other:
A Day in the Life:I occasionally do the angry old man thing and fume at the TV. The reasons, as always in these cases, are many and various but one thing that I’ve got a bit of a downer on at the moment is sloppy reporting. A bigger issue is not reflecting both sides of the story – or doing so in a grudging way that can only be designed to sway the listener/viewer/reader – but a minor issue comprises the use of filler phrases. I mean why, for example, would you stick in the words ‘no doubt’ – or even let politicians use those words unchallenged – to almost any report concerning politics, finance, healthcare or whatever. Because, I think you’ll find, there are always doubt. And you shouldn’t use ‘clearly’ for the same reason and even the word ‘therefore’ suggests an acceptance of some sort of progression of thought and that might be totally absent. Hence, it was with an air of resignation that I watched the reporting of Mark Carney’s comments re Brexit yesterday because, having watched the Press Conference live at 12.30, it was clear that Mr Carney had had some words put in his mouth. ‘Is it possible’, the journalists asked him, ‘or at least not completely and utterly impossible, that a Brexit could lead to a recession?’ Perhaps the crowning glory in the after-noise was when a hysterical journalist quoted a hysterical Brexit campaigner as saying that Mr Carney was hysterical. On to the news: The News:RECENT WEBSITE ARTICLES: • Main features London hotels, slowing markets, Restaurant Group etc. Link to index page – here PUB, RESTAURANT & DRINKS PRODUCER NEWS: • Coca Cola HBC reports ‘a good start to the year’, Q1 numbers show volumes stable ‘with an improving underlying trend’ • Coca Cola HBC sees ‘good growth in Nigeria, Romania and Poland [which] offset weak performance in Russia’. It says ‘premium sparkling brands, water and energy drinks performed well’. • CCHBC Q1: Says ‘established markets volumes declined by 2.7% while Italy maintained positive momentum.’ Says ‘developing markets volumes grew in nearly all categories and countries resulting in overall volume growth of 1.9% despite tough comparatives. Pricing remains weak, particularly in the Czech Republic and Poland.’ • CCHBC Q1: Says ‘emerging markets volumes were robust; Nigeria was the key driver with low-teens percentage volume growth in a seasonally important quarter; in Russia, we outperformed in a declining market with our volumes continuing to decline across the categories with the exception of Coke Zero and energy drinks.’ • CCHBC Q1: Net sales revenue down 2.7% (down 3.6% in established markets and down 1.9% in developing markets) • CCHBC Q1: CEO Dimitris Lois reports ‘we had a good start to the year with Q1 trading in line with our plans.’ He adds ‘our commercial initiatives delivered beneficial results, improving currency-neutral revenue per case by 2%. ‘ Mr Lois concludes ‘we are encouraged by the ongoing volume growth in Emerging and Developing markets and the improving underlying trend in Established markets. While soft in the quarter, pricing trends in Developing markets are improving. We are confident we have the right initiatives in place to continue our progress in the remainder of the year.’ • Shareholders at Restaurant Group give board poke in eye over pay. More than 26% vote against remuneration report. The proposal to pay the board £4.6m went through, of course and, even if shareholders had voted against, this is an advisory vote rather than a definitive statement from shareholders as to what can and cannot happen • Enterprise Inns yesterday bought back 60,516 shares at around 93.5p. JD Wetherspoon bought back 20k at 711.3p • BrewDog has introduced two new beers: the Barrel-Aged albino Squid Assassin, a whisky cask-aged IPA, and the Ace of Chinook, part of the brewers Ace of Hops series. • AB InBev has entered into agreement with Ambev SA in which AB will transfer SAB’s Panamanian business to Ambev in exchange for the its businesses in Peru, Columbia, and Ecuador. • CGA Peach data indicates there is little sign of consumer confidence picking up, with a number of surveys pointing to low confidence and spending in the past few months. CGA Peach’s BrandTrack survey of British consumers in April shows that only 28% of consumers were either optimistic or very optimistic about the state of the economy in 2016, compared to 30% who were pessimistic or very pessimistic. • Speaking to MCA, Pizza Hut UK & Ireland CEO Raphael Miolane, described the group’s 10-strong Pizza Hut Express as its ‘hidden gem that we are now polishing’. The group is looking to take its grab and go concept, which focuses on deep pan pizzas, chicken wings, and salads, to 50 sites over the next four years as part of a 200 site expansion programme. • Champ PE, owner of Accolade Wines, is looking to list the global wine company and offload its 80% stake via the LSE, Australian Stock Exchange, or a trade sale. The news comes just a week after Conviviality Retail announced its acquisition of Bibendum, giving it an 8% share of the UK market. • Zing Zang, the Chinese chain enthusiastically received on crowdcube, is looking to open 13 more stores by 2020 before rolling out nationwide. The group’s pitch recently ended 457% oversubscribed, with £1.6m being put forward in exchange for 30% of the business. • The Nielsen CGA On-Premise Consumer Survey of the US restaurant and bar market shows that tequila is the favourite liquor base for cocktails (44%). This is followed by light rum (39%), flavoured vodka (39%), non-flavoured vodka (39%), and whiskey (27%). LEISURE TRAVEL: • Intercontinental Hotels has confirmed the Sterling amount that it will pay to shareholders via a special dividend as 438.2p per share. • PPHE Hotels has announced that it is to refinance its interests in Park Plaza Westminster Bridge via a 12yr loan of £182.4m. President & Chief Executive Officer of the Company Boris Ivesha comments ‘the current favourable market conditions have enabled us to continue our ongoing programme for the long term refinancing of assets within the Group.’ He says ‘we remain focused on growing our market share and delivering great customer service.’ • Premium hostel accommodation operator Safestay is combining conventional hotel quality with the more affordable facilities of a hostel. The group has already set up sites in London, York, and Edinburgh, with beds available for as little as £20 a night. • Preliminary data from STR shows that London hotels had a relatively flat April, with occupancy down 0.7% to 80% as oversupply shows no signs of abating. Average daily rate was pushed up 0.9% to £136.22, while revenue per available room inched up by 0.2% to £109.04. • The US hotel industry saw decidedly mixed results in April as occupancy slid by 1.6% to 65.8%, although a 2.1% rise in ADR to $123.43 helped keep RevPAR up 0.4% at $81.19. • Uber drivers have been barred from parking in villages near Heathrow in an attempt to limit congestion and clear the way for a third runway. • The UK and Russia are said to be reviewing their flight bans to Sharm el-Sheikh after Germany agreed to resume its services. Commercial flights were suspended after a Russian Metrojet Airbus flying from the Red Sea resort’s airport to St Petersburg exploded in October, killing all 224 passengers and crew. • Travel Counsellors’ global sales rose 7% in April thanks to increased usage of its in-house system, which accounted for 46% of total earnings. OTHER LEISURE: • ITV yesterday said that current advertising sales, down 13% in April, were under pressure due to Brexit uncertainty. The group says a relatively stable performance was ‘against the backdrop of uncertainty in the UK advertising market, which we have experienced since the debate over Brexit began’. BANK OF ENGLAND, RATES & BREXIT: • Bank of England MPC holds rates at 0.5%, QE at £375bn. Cuts estimate for growth this year to 2.0% from 2.2% • Governor Carney says growth ‘fell to 1.5% earlier this year and has fallen further since’. He needs a Q3, 4 pickup to hit targets. • Inflation report. CPI will get to 2% by end-18 & go a bit beyond thereafter. Interest rates ‘will need to be higher by then’ • Inflation report & Bank webcast. Brexit is the ‘elephant in the room’. Banks numbers are based on a Bremain scenario. • Bank says if UK exits EU, inflation would be higher & growth lower than under its base case scenario. • Governor Carney says ‘there has been a more marked deceleration in growth this quarter’. And Q1 wasn’t particularly buoyant FINANCE & MARKETS: • UK 10yr gilts rose for 10 straight days up until yesterday, a near 30yr record. Prices fell slightly yesterday • UK government is to target the c100k properties owned by foreign companies. Raising tax from non-voters was ever popular. Might not be so positive for certain types of house prices • RICS says that demand should fall now that landlords can’t speed up housing transactions in order to avoid higher Stamp Duty. It says ‘while reduced demand from buy-to-let and second-home buyers appears to have been the main cause of this fall, it may also reflect some uncertainty beginning to enter the market in the run-up to the UK’s referendum on its EU membership.’ • US Fed’s Esther George, the Bank of Kansas President, has said that interest rates are currently too low. She believes that the US labour market is “at or near full employment” with inflation “close to the FOMC’s target of 2%”. • World markets: UK down yesterday, Europe also lower. US down later and the Far East lower in Friday trade • Oil price off its peaks but still trading at around $47.80 per barrel • Moody’s reports new London Mayor’s campaign pledges are Credit Negative the city re housing and transport. Says finances will be stretched if commitments on cheaper travel and help for housing associations are honoured Retail Roundup from Nick Bubb:
Trade Press: News Flow Next Week: The week kick off with two of the big Retail property companies reporting final results: British Land on Monday and Land Secs on Tuesday. The Lookers IMS update is also on Tuesday. Wednesday then brings the Burberry finals. The busy day, however, is Thursday, with the Asda/Wal-Mart Q1, the Mothercare finals, the Booker finals, the ONS Retail Sales figures for April and the Game Digital EGM vote on their refinancing. The Moss Bros AGM update is then on Friday. And at some stage the administrators should unveil the outcome of the bidding for BHS… Sports Direct: With news expected soon on its bids for the bankrupt BHS and Austin Reed chains, Sports Direct has put out an announcement today (in the aftermath of last night’s news that Mike Ashley’s beloved Newcastle have been relegated from the Premier Division) that says…the 10.5% put option in Debenhams has been extended for one year. Quite what the company has gained from the stake over the last year is unclear and there is still no sense that a takeover bid is possible (as that wouldn’t help Debenhams’ quest for a new CEO…), but the statement ends with the comment that “Sports Direct reiterates its intention to be a supportive stakeholder in Debenhams and to create value in the interests of both Sports Direct’s and Debenhams’ shareholders”. BRC Conference Watch: The prestigious annual BRC Symposium Retailing conference took place at the Whitbread Brewery in the City yesterday. We missed a good presentation in the morning on “Making a Business Fit for Growth” by CEO Catriona Marshall of Hobbycraft, due to a last-minute scheduling change, but we caught a surprisingly good presentation after lunch by the former Home Retail CEO, Terry Duddy, on Online retailing, albeit his view that Online is over-hyped sounded as if it was driven by his two non-exec Director positions at Hammerson and Debenhams…And the startling view of KPMG’s Retail boss David McCorquodale, in a panel session on Retailing Risks and Cyber-Security, that many companies may have “sleeper cells” embedded in their IT departments by criminal gangs waiting to exploit data breaches…lives long in the memory.
Yesterday’s Press and News:
M&S Autumn/Winter Range Watch: Big Easy Availability Watch: The much hyped “Big Easy” autumn range (which is, of course, just a summer range called an autumn range) available in 26 M&S stores has some surprising omissions, notwithstanding the need to spread the availability out nationwide, as there is no M&S Lakeside, M&S Trafford Centre or M&S Metrocentre on the list…although residents of Richmond will be pleased to see that Kingston is on the list. Nick Bubb – nicholas_bubb@hotmail.com Yester-tweet – Yesterday in a Nutshell: Live Tweets on Website:(SOME OF OUR) EARLY TWEETS: • MCA reports Rutland Partners has deferred its sale of Pizza Hut saying now is not the right time to “derive fair value” from disposal • Carlsberg reported Q1 numbers yesterday, referred to less buoyant outlook in Eastern Europe & Asia. • Consumer spending fell for 2nd month in row in April hit by slow wage growth, flat employment & Brexit uncertainty • JDW founder Tim Martin has donated £200,000 to Vote Leave, the campaign for Britain to leave the EU. • HVS says most recent HVS/AlixPartners Hotel Bulletin suggests ‘the peak of the hotel property market may have been reached.’ • HVS says plenty of people still coming to London. Problem appears to be, there are too many hotel rooms • British Hospitality Association calls for government to cut tourism VAT to help plug UK’s £13.3bn trade deficit • Rank updates on Q3 (19wks to 8 May), says LfL sales growth 3%, total revenues +2%, digital revenue +6% • Britain’s economy faltered in the three months to April partly as a result of Brexit uncertainty, according to the NIESR • UK industry fell back into recession, shrinking for the second consecutive quarter, according to the Office for National Statistics (ONS). • ECB must not keep rates this low for too long says German central bank governor Jens Weidmann. It’s all a question of definition LATER TWEETS: Housing & economy: • Forward (or sensitive) indicators pointing to slowdown. JC Decaux (global advertising) numbers disappoint, ITV likewise • RICS saying they’re seeing sharpest fall in enquiries from potential homebuyers since 2008. Humm… • FTSE All Share volumes yesterday lowest for a month, oil stockpiles in US falling for first time in 6wks London hotels: • STR on London. Say April supply +2.7%. Occupancy down 70bps, rate +0.9%. REVPAR up but industry peddling on thin air? • STR says April REVPAR only slightly higher in April despite Easter shift favouring business travellers that month Economy & Other: • Moody’s says New London Mayor’s pledges are Credit Negative for transport & housing associations. Commitments would stretch funding • No inflation to speak of but oil higher & soybeans (important input) much more expensive http://www.nasdaq.com/markets/soybean.aspx • German Central Banker Weidmann must have been reading our tweets. Says low interest rates threaten to create asset bubbles etc. See e/m • Sharp uptick in Barclaycard’s spending numbers for restaurants (+11.3%) and pubs (+6.4%) driven by shift to contactless spending • Barclaycard data. Shift to contactless boosted by move from £20 to £30. Clearly impacts pubs/restaurants & not holidays, furniture etc. Restaurant Group etc. • Rutland fails to sell 280 Pizza Hut restaurants for £150m. Little over half a bar a piece? Not priced for growth, then? • RTN & Pizza Hut. Latter failed to sell at £530k per unit, former trades, even after price falls, at >£1.2m per site • RTN vs Pizza Hut. Yes, RTN has some freeholds & better growth at airports & in pubs. But arguably both brands mature, growth less easy etc. • Director pay. Board costs in pubs/rests. £8.9m at WTB, £2.1m M&B. JDW £2.5m but RTN in at no2 with £4.6m for co that has lost c£1bn in value • Board costs. Whitbread an outlier on the high side but RTN has (or had) a costly board. £4.6m including >£400k for N/E chairman Bank of England: • Bank of England maintains rates at 0.5%, QE at £375bn. Cuts growth estimate this year from 2.2% to 2.0%. Inflation Report webcast 12.30 • Governor Carney says growth ‘fell to 1.5% earlier this year and has fallen further since’. He needs a Q3, 4 pickup to hit targets. • Inflation report. CPI will get to 2% by end-18 & go a bit beyond thereafter. Interest rates ‘will need to be higher by then’ • Inflation report & Bank webcast. Brexit is the ‘elephant in the room’. Banks numbers are based on a Bremain scenario. • Bank says if UK exits EU, inflation would be higher & growth lower than under its base case scenario. • Governor Carney says ‘there has been a more marked deceleration in growth this quarter’. And Q1 wasn’t particularly buoyant |
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