Langton Capital – 2018-08-09 – Adnams, Cineworld, TUI, EasyHotel, Coke HBC & other:
Adnams, Cineworld, TUI, EasyHotel, Coke HBC & other:
A DAY IN THE LIFE:
So, with the sun beating down on us and no air-conditioning in the apartment, we’d suggest not renting a south-facing property during a heatwave.
And, here in Berlin, it is exceedingly hot.
It’s meant to break today before building again next week but, as we’re legging it down to Prague via Dresden later today, that won’t do us much good and, as Prague is forecast to be 36 degrees with blazing sun.
Ah for those 15-degree, light-drizzle summer days of our youth. On to the news:
PUBS & RESTAURANTS:
• Adnams has reported H1 numbers saying ‘after an exceptional year of investment in 2017 the first half of 2018 was a period of transition with the focus of the business being on developing the new capacity in our brewery and on building the proposition at the Swan.’
• Adnams reports ‘turnover has continued to grow well and at £35.5m it is up by 7.1% on 2017. Adnams own beer volumes are up by 4.8% on 2017, and own spirits are up by 6.3%. The board has agreed an unchanged interim dividend of 78p per “B” share and 19.5p per “A” share.’
• Re the outlook, Adnams reports ‘the future appears particularly uncertain at the moment with the unknown shape of the impending exit from the European Union. Adnams is focussing on being flexible and agile to cope with the changes that will come. We have invested substantially in our brewery and are making a further major investment in new systems. We will continue to focus on the long term and on building a business for the future.’
• Coca-Cola HBC has reported H1 numbers saying it has seen ‘strong revenue growth, 6.4% in the first half on an FX-neutral basis; acceleration in the second quarter, supported by new product launches, good weather and the FIFA World Cup.’
• Coca Cola HBC reports ‘volume accelerated in the second quarter, resulting in 4.6% growth in the first half. Sparkling beverages volume was particularly strong, also up by 4.6%.’
• CEO Zoran Bogdanovic comments ‘the evolution of our portfolio is gathering pace and gaining traction with customers across our markets. We have delivered a strong set of results as product launches and tailored commercial activation enabled us to capitalise on favourable market conditions and the FIFA World Cup.’ Mr Bogdanovic concludes ‘we continue to make good progress against the 2020 targets and expect to deliver another year of revenue growth and improvement in margins.’
• KAM Media has reported that only 59% of Generation Z adults interviewed now ate meat. This compares with around 90% of the total UK adult population.
• KAM Media reports 39% of Gen Z adults interviewed did not drink alcohol. Katy Moses, managing director at KAM Media, comments ‘this research can provide brands and retailers in the off and on trade with essential insight into what Generation Z want from them and how you can deliver against it in order to ensure that you’re influencing the influencers and not being left in the past.’
• The British Beer & Pub Association has updated its cost guide for tenants and lessees. CEO Brigid Simmonds reports ‘whether you already run a pub or are thinking of taking one on, this new report is a must-read. It includes essential information on the current costs involved in running a Great British pub and can be downloaded – free of charge – from our website.’
• The guide comments on business costs across nine categories of pubs from small community locals through to larger, food-led operations. Details are available on the BBPA’s website.
• NPD has reported that delivery now accounts for 3% of restaurant revenues in the US. The value delivered is up 20% since 2012.
• The RICS has said that, despite well-publicised retail failures and voids on the High Street, rents could rise by 15% by 2023 as the supply of new rental properties ‘dries up’. The RICS says ‘the risk… is that a reduced pipeline of supply will gradually feed through into higher rents’.
• Monster Beverage has reported Q2 sales of $1.02bn, breaking the quarterly $1bn mark for the first time in its history.
• The serial restaurateur Luke Johnson has been reported to have put in an offer for Gaucho, according to Sky. The entrepreneur joins Carlyle, the American buyout firm, among the prospective buyers of Gaucho from Deloitte, which is handling the administration.
• Northern Italy is experiencing multiple weather hazards which include hail, floods, tornadoes and strong winds, causing concern over the 2018 vintage in regions like Lombardy, Piedmont, Emilia-Romangna and Veneto.
• The Telegraph has reported that the importance of social media has forced landlords into spending lavish amounts on prettifying their facades with colourful displays that encourage selfies.
• The Milkmaid Pavilion on Brighton’s promenade has been acquired by City Pub Co.
• The Regency Purchasing Group has stated that recent hot weather has resulted in a poor harvests, including some of the chief elements of pub staples.
• Nielsen has reported that there has been minimal impact on the consumption of sugary soft drinks following the implementation of a levy on the sector in April. Nearly two thirds of consumers have claimed that they buy soft drinks at the same frequency prior to the enforcement of the tax.
• Asahi partners with UberEats and Deliveroo to provide delivery for its Peroni brand in London.
• Customers of British Gas are set to see a second price hike this year with bills increasing by £44 on average. Centrica, the owner of British Gas, blamed it on a 20% rise in the cost of buying wholesale gas.
• Bidfood has reported that value for money, convenience and healthy choices have become crucial for attracting British customers.
• Bidfood reports that UK consumers are eating out less frequently than last year, with 45% actively reducing their leisure spending. Bidfood says ‘our aim was to uncover restaurant must-haves, as rated by diners, to help operators attract footfall and ensure their business is future fit in such a competitive market.’
• The Grocer reports that McDonald’s UK is now carrying out c50,000 deliveries per day from its 500 or so restaurants
• Homebase is reported set to close 60 stores and sack c2,000 staff
• Telegraph reports UK high street has lost around 1,200 shops to date (pre Homebase) with perhaps 20k jobs lost
• Tesco is to move to canned water in order to reduce plastic waste
HOLIDAYS & LEISURE TRAVEL
• TUI reports Q3 numbers. Revenue up 6.3% to €5.02bn with the group saying ‘we have delivered our second year in a row of profitable 9M underlying EBITA, demonstrating the successful strategic positioning of TUI and further reduced seasonality.’
• TUI says ‘underlying EBITA increased by EUR 58 m at constant currency rates, or by EUR 28 m at actual exchange rates to EUR 35 m.’
• TUI reports ‘profitable growth was delivered as a result of continued strong demand for our Holiday Experiences – including additional hotel and cruise ship capacity as we continue to deploy the proceeds of disposals into higher returning assets – and a good portfolio performance by Sales & Marketing, with some external challenges in recent months.’
• Re the outlook, TUI reports ‘based on the positive 9M result…and current trading for the remainder of the year, we expect to deliver at least 10 % growth in underlying EBITA.’
• EasyHotel reports that it has completed on its purchase of a hotel in Cardiff and goes on to say that its Swiss franchisee has added five hotels totalling 174 rooms.
• EasyHotel reports ‘easyHotel Belfast will open on 10th August, taking the total number of hotels in the Group’s portfolio to 29. With the addition of the new hotels in Switzerland, the Group’s development pipeline currently includes 1,280 owned/lease rooms and a further 1,956 franchise rooms now under development.’
• Inbound flow of tourists from China into the UK continues to grow. Some 250k visited from the People’s Republic in 2017.
• Choice Hotels International reports Q2 adjusted net income up 49% yoy to $63.4m, with total revenues up 13% to $295.4m. The company raised its full-year guidance for adjusted EBITDA to a range between $333m to $339m.
• In the US, Host Hotels & Resorts president and CEO James Risoleo comments on Q2 results, saying ‘We are again pleased to report operating results that meaningfully exceeded our expectations for the quarter, resulting in strong bottom-line performance and increased full-year guidance.’
• ForwardKeys and GfK reports Turkey, Tunisia and Egypt are seeing British holidaymakers return following a period of risk of unrest or terrorism. Turkey posted 66.4% growth in UK leisure bookings yoy, with Egypt up 50.9% and Tunisia up 901%. Holiday bookings to more traditional safe destinations, Spain and Portugal, have fallen back 2.5% and 0.2% respectively.
• Cineworld H1 numbers, co says it generated revenues of $1.87bn in the half year, up from a pre-acquisition $528.7m last year. Chairman Anthony Bloom reports ‘the first half of the current financial year was a successful and exciting time for the Group. It completed the transformative $5.8 billion acquisition of the Regal Entertainment Group in the US; a successful $2.3 billion Rights Issue; and the renegotiation of the Group’s debt facilities on advantageous terms.’
• Cineworld CEO Mooky Greidinger comments ‘we are pleased to announce strong first half results following the successful acquisition of the Regal Entertainment Group.’ He says ‘the second half of 2018 has started well’ and adds ‘based on the film slate in the second half and our first half results, we remain confident of delivering a performance for the year as a whole in line with management’s expectations.’
• 21st Century Fox has reported full-year profits up almost 50% to $4.48bn (£3.38bn) in the period to 30 June.
• MGM Resorts & its venture partner have sold the Grand Victoria Casino in Illinois for $327.5m to Eldorado Resorts. MGM Resorts will receive $162m of the final fee.
• Snap reports lower numbers of daily active users at 188m in Q2, down 3m on Q1. Snapchat was criticised for its redesign by Kylie Jenner earlier this year.
FINANCE & ECONOMICS:
• China is to add 25% tariffs to $16bn worth of US imports
• Sterling down at $1.2869 and €1.1089
• Oil down to $72.48
• UK 10yr gilt yield down 1bp at 1.32%
• World markets mixed.
START THE DAY WITH A SONG:
Yesterday’s song was Town Called Malice by The Jam. Today, who sang:
A fake Jamaican took every last dime with that scam,
It was worth it just to learn some sleight of hand
Bad news comes, don’t you worry even when it lands
Good news will work its way to all them plans
RETAIL NEWS WITH NICK BUBB:
Card Factory: Ahead of today’s first half pre-close update, the Sunday Times flagged that the boss of Card Factory, Karen Hubbard, would come under pressure if she cut the full-year earnings guidance on the back of the Q2 trading….and, would you believe it, that’s what she’s done. “Due to the weak consumer environment and extreme weather conditions”, Q2 LFL sales remained disappointing, with cumulative LFL sales for the first half down pretty much in line with the weak Q1 outcome of -0.4%, at -0.2% (-0.7% in stores) and on the back of that full-year EBITDA has been guided down to a range of £88m-91m (versus £94m last year, which was 5% down), on the assumption that Christmas will be good. Shareholders are unlikely to be consoled by the news that they are still likely to get a 5p-10p special dividend this year.
New Look: Yesterday’s papers picked up on the improved Q1 results from the struggling fashion chain New Look announced on Tuesday, but on closer examination they weren’t that good…Overall LFL Brand sales were still down, by 4.0%, in the 13 weeks to June 23rd, despite the helpfully hot weather in May/June and very weak comps. It was, if memory serves, the dreadful Q1 last year (with Brand sales 8% down LFL) that led the Board to finally lose their patience with CEO Anders Kristiansen and give him the order of the boot…A year on and the Executive Chairman Alistair McGeorge boasts of “Improved financial and operational stability” and a “return to proven broad appeal product”, but EBITDA only recovered slightly in Q1 because of cost savings. Still, at least there is a general sense of slight recovery at New Look, which is more than can be said of their fellow “big box” fashion rivals like
House of Fraser: According to Sky News, House of Fraser’s fate could be sealed tomorrow as its creditors assess three takeover bids from Sports Direct owner Mike Ashley, Jaeger owner Philip Day and turnaround firm Alteri Investors.