Langton Capital – 2018-08-03 – Discount Rates, Interest Rates, Yum! Brands
Discount Rates, Interest Rates, Yum! Brands & Other:
A DAY IN THE LIFE:
So, the lawnmower has officially thrown in the towel and left us in the lurch ahead of our holidays.
It can’t really be said, of course, that Langton was looking forward to cutting its grass but, as the alternative was (and is) to come back to an out-of-control jungle, it seemed the lesser of two evils.
But that option has gone and enforced gardening unemployment is the order of the day. Better get back to the packing. Netherlands tomorrow, Berlin later in the week, Prague after that then back at a snail’s pace across Central Europe. On to the news:
PUBS & RESTAURANTS:
• Ei Commercial Properties, the group’s management of leased assets to third parties division has agreed to a 20-year commercial free-of-tie lease with Ego Restaurants in Haslington, Cheshire. Greg Parkes, Commercial Property Director at Ei Commercial Properties, said: ‘Our aim is to maximise the value of Ei Group assets using our expertise and partner with exciting, high-quality operators’.
• Yum! Brands has reported GAAP EPS up 68% t0 $0.97 in its Q2 results. Greg Creed, CEO of the group, said: ‘We continue to execute against our multi-year transformation strategy and remain on track with our full-year 2018 guidance. Second quarter core operating profit was consistent with our expectations and we are seeing good progress against our plans as we start the second half of the year’.
• Discounts still a major feature with Prezzo 40% off mains, Pizza Express 25% off, Bella Italia 30% off, Domino’s 35% off deliveries over £30. Café Rouge offering a second meal for a pound – equates to perhaps 45% off.
• NRN reports that Subway to undertake an $80m brand refresh programme across its units in the USA.
• Bank of England raises interest rates from 0.50% to 0.75%. Highest level since March 2009. Still very low, though.
• UK Construction PMI rises from 53.1 in June to 55.8 in July. Housebuilding rising at its fastest rate in two and a half years. Markit says ‘July data reveal an impressive turnaround in the performance of the UK construction sector, with output growth the strongest for just over one year. While the recent rebound in construction work has been flattered by its recovery from a low base earlier in 2018, there are also signs that underlying demand conditions have picked up this summer.’
• Punch has made its first individual pub acquisitions in 11 years, purchasing the Royal George in Cardiff and the Unicorn in Loughborough.
• The Quarterly Business Report, created by foodservice expert, Peter Backman, has found that the coffee market is undergoing large-scale change. Peter commented: ‘JAB Holding Company is openly targeting Nestle with the aim of becoming the pre-eminent global coffee business. In the last quarter, it has acquired Pret a Manager to add to a growing portfolio that includes grocery brands and foodservice operators like Krispy Kreme. Meanwhile, Nestle is in the throes of reaching a deal to supply Starbucks branded coffee to the grocery sector and Costa is becoming a standalone business from Whitbread, making it a target for acquirers’.
• The MCA has reported that The Restaurant Group is launching a delivery-only concept for its Chiquito brand called Kick Ass Burrito.
• The UK is the leading export market for Spanish brewer Mahou San Miguel, which managed to grow volume and value in 2017 despite a ‘challenging market environment’.
• AB InBev is launching a new accelerator to fund sustainability-focused startups and will provide $100,000 to each startup, as well as mentorship from its incubator division ZX Ventures.
• It is thought that a number of parties decided not to bid for steak restaurant chain Gaucho yesterday, which is now valued at under £30m per MCA.
• Ireland’s number one motorway service operator Applegreen is set to become the largest in the UK following its acquisition of a majority stake in Welcome Break. The company this morning said it had entered into an agreement with NIBC European Infrastructure Fund I C.V. to acquire its entire 55.02% holding in Welcome Break for a cash consideration of approximately €361.8m (£321.6m). Welcome Break generated revenues of £723.4m and adjusted EBITDA of £66.4m in the year to January 2018.
HOTELS & LEISURE TRAVEL:
• Millennium & Copthorne Hotels has reported a decrease in Group RevPAR of 4.3% to £75.29 in its H1 2018 results. The group stated revenue fell by 3.3% to £404m. Mr Kwek Leng Beng, Chairman commented: ‘I am pleased to welcome Jennifer Fox as Group CEO. I am working with her closely to expedite the changes we agree are necessary to improve performance as a niche owner-operator of hospitality assets. I am confident that her expertise in branding and marketing will bring benefits to the Group’.
• Holidaymakers destined for Spain or Portugal face extreme heat next week, with temperatures forecast to reach a record 48 degrees Celsius. The heightened risk of forest fires also applies to Portugal, with holidaymakers from the UK urged to keep abreast of the weather forecast on the Portuguese Met Office’s website.
• Royal Caribbean Cruises reports Q2 net income dropped to $466.3m compared to $482.2m last year. Gross Cruise Costs per APCD increased 1.1% in Constant Currency yoy. Adjusted earnings for the full year are expected to be in the range of $8.70 to $8.90 per share. Chairman and CEO Richard D. Fain said ‘While we are frustrated by foreign exchange and fuel rates, we are tickled pink that our business continues to excel and overcome these headwinds’.
• Neilson Active Holidays has been acquired by LDC from private equity. Partner and head of consumer at Cavendish Corporate Finance, Jonathan Buxton, said ‘There is a growing demand for activity and wellness holidays in the UK and this transaction will enable Neilson to meet the needs of its growing customer base, drive the expansion of Neilson’s award-winning beach clubs and increase its presence across key holiday destinations in Europe and around the world.’
• Theresa May has been warned that UK-only passport lines at airports will generate longer queues at home and abroad. Home secretary Sajid Javid is reportedly thought to be resisting May’s plans to create such lanes after Brexit.
• Meliá Hotels International reports H1 earning up 7.2% to €61.8m with the depreciation of the dollar having a significant impact on results. Total revenues excluding exchange rate differences increased by 0.5% and EBITDA excluding capital gains improved by 7.4%. Chief executive of Meliá Hotels International Gabriel Escarrer said ‘We can confirm a positive forecast for the third quarter, and it is particularly comforting to note that growth in our Mediterranean resorts has not been affected by the recovery of destinations in North Africa and Turkey’.
• Texas-based travel technology giant Sabre reports Q2 revenue up 9.3% to $984.38m with booking volume growth of 7.6% to 122,864. However, the group’s airline solutions division saw revenues down 2.4% to $2014.82m, with passengers boarded down 9.3%. Sean Menke, Sabre president and chief executive, said ‘The macro global travel environment was supportive, and as a leader at the centre of the business of travel, we benefitted.’
• William Hill has reported H1 figures for the 26 weeks ended 26 June 2018, showing revenue up 3% to £802.6m and adjusted operating profit climbing 1% to £130.8m. Exceptional charges and adjustments of £915.9m has resulted in the group registering a statutory loss before tax of £819.6m. Philip Bowcock, Chief Executive Officer of William Hill, commented: ‘William Hill has performed well during the first half of 2018 and, following major regulatory decisions in the UK and US, we now have greater clarity over the challenges and opportunities that lie before us’.
• Paddy Power has announced that it has entered into an agreement with Boyd Gaming to co-operate in the US sport betting and online casino markets.
START THE DAY WITH A SONG:
Yesterday’s song was Blue Monday by New Order. Today who sang:
We get these pills to swallow,
How they stick
In your throat
Tastes like gold