Langton Capital – 2019-08-15 – Beer Duty, Carlsberg, Vianet, holiday bookings, GVC etc.:
Beer Duty, Carlsberg, Vianet, holiday bookings, GVC etc.:A DAY IN THE LIFE: I found myself having to apologise to an inanimate object yesterday as I blamed a 6pt milk container (which we lazily use to top up the kettle rather than having to pop to the tap every few minutes) for a minor flood that was, in fact, the fault of the coffee percolator. However, as I’d already emptied, cursed at, stamped on, flattened and sent the milk container to be chopped up, melted and recycled, I’m not sure that my apology did much good and, whilst the leaky coffee percolator is still looking at me guiltily from the top of the fridge, the milk container is truly gone forever. Which may turn out to be an analogy for the UK economy post the Brexit process, who knows? The drivers of the whole thing may be writing their memoirs on a Greek island whilst our kids try to pick up the pieces. Let’s hope not and, for the moment, let’s move on to the news: LANGTON PREMIUM EMAIL: Corporate Offer: Premium email just £295 (plus VAT) for a single subscriber or £495 (plus VAT) for multiple subscribers. Drop us a line to get involved. Retail Offer: Easy in, easy out. £30 per month (inc. VAT) via PayPal. Email us for details or check here: PRIVATE COMPANY RESULTS: Dishoom Ltd reported FY numbers to 30 Dec 2018 to Companies House last week. The good numbers were lodged, with a clean and short statement, well ahead of time. 15 Aug 2018: Other results to be covered include Bourne Leisure, St Austell Brewery, Daniel Thwaites & JW Lees. See Premium Email. GENERAL NEWS – PUBS & RESTAURANTS: • Marston’s CEO Ralph Findlay has called on PM Boris Johnson to cut beer duty to help save pubs that are at the heart of many of the local communities they serve. • Mr Findlay points out that governments have tended to increase duty to the point now that 54p per pint is now paid to the Treasury. Mr Findlay told Reuters ‘the average pub is paying £140k a year to the government and a big chunk of that is beer duty.’ • The Marston’s CEO continues, saying ‘there are a wide range of cost pressures, but for pubs and particularly the community pubs that matter locally, about 70% of all the sales across the bar are beer. It’s [beer duty is] one of the biggest costs the pub has to bear and it’s one of the easiest thing for the government to manage.’ • Mr Findlay has called for a cut, rather than a freeze on beer duty saying that it would be a populist measure in line with other suggestions coming out of number 10 such as cutting taxes, raising spending on the NHS, the police, prisons, social care etc. • MCA Insight has said that a no-deal Brexit could cut the value of the eating-out market by up to £5.4bn. It says a no-deal would be disruptive and lead to the introduction of tariffs between the UK and the EU. • The UK would also lose trading agreements that it currently has in place with non-EU countries through virtue of its membership of the EU. It would revert to World Trade Organization terms and have to change the mechanics of its trading accordingly. • The MCA says ‘it is clear that Brexit has already had a detrimental impact on the UK eating-out market, however, our forecasts predict even bigger problems if the UK leave the European Union without a deal.’ It says ‘a no-deal Brexit will have clear implications on consumer confidence and spend. Rising inflation as a result of increased input prices will squeeze household incomes at a time when consumers are limiting discretionary spend.’ • MCA says ‘saving is currently at a record low, however, we expect this to change as precautionary consumers save due to economic uncertainty.’ The UK eating and drinking-out market has already shrunk by an estimated 1.9% since the 2016 referendum. • Danish brewer Carlsberg has this morning reported H1 numbers saying that sales rose by 6.5%. CEO Cees ‘t Hart says ‘we delivered a strong set of results for the first six months of 2019, with healthy top-line development, strong margin improvement and continued solid cash flow.’ Last week, Carlsberg raised its FY profit guidance on the back of strong H1 sales. PBT was 4.85bn Danish Crowns vs 4.01 in the prior year. • Mr ’t Hart says ‘we’re pleased that last week we were able to adjust our earnings outlook upwards due to the performance in the first half and a solid start to Q3, and despite tough comparables. The earnings upgrade is yet another proof point that the execution of our SAIL’22 priorities is driving sustainable, long-term value creation for the Group.’ • Flow management and Internet of Things company Vianet has updated on trading saying that ‘trading for the first four months of 2020 financial year has been as anticipated with the Group being on course to meet market expectations.’ • Vianet says that its Smart Machines division ‘has successfully concluded negotiations on three long-term contracts with leading vending operators. The combined contracts for 20,000 units will generate in the region of £10 million of revenue over the three to five-year contract terms, which further underpins the growth of Smart Machines. • Vianet Chairman James Dickson says ‘we are pleased with the contract wins, which are evidence of the Group’s positive start to the year.’ • Sports Direct’s auditors, Grant Thornton, has resigned. The group now needs to find a replacement in order to retain its listing. • Boxpark has appointed KPMG Corporate Finance to review its options after receiving proposals from interested parties to expand its business in the UK and overseas, Big Hospitality has reported. • The parent company to Chili’s and Maggiano’s Little Italy, Brinker International has announced it is entering into an exclusive partnership with DoorDash for delivery. Brinker reported Q4 net income of $46.7 million ended June 26, up from $43.8 million. • Research conducted by the Food Standards Agency has found that 49% of consumers are concerned about the level of sugar in food. • Allegra World Coffee Portal has found that the out-of-home UK tea market has increased 11.1% to £302m in the last year. • Primark has told Beverage Business World that it plans to continue with the expansion of its own branded cafes within stores in the coming year. • Poundland has trialling selling products for more or less than £1. Several household products will retail for 50p, while others will cost between £1.50 and £5. • MatchPint, the company that connects sports, pubs and brands, has announced it is set to launch in France, after buying £1.1 million valued AlloMatch, the platform’s French equivalent. HOLIDAYS & LEISURE TRAVEL: • GfK has reported that UK summer bookings for overseas holidays have risen in each of the last two weeks. • GfK says bookings in the week to 10 August were up by 15% on last year and in the week to 3 August they were up 8%. Summer bookings for the season as a whole remain up 1%. That is termed ‘strong’ by GfK but, as it is up against easy comps in the shape of the World Cup and hot UK weather last year, some operators may still be struggling. • GfK says family and all-inclusive bookings continue to drive the market. All-inclusive bookings are up 7% season to date and 18% in the week to August 10, with family bookings up 21% in the week. • Thomas Cook’s shares were down another 9% yesterday with TUI down 4% as investors digested the latter’s Q3 trading update and reacted to global issues • The Eurostar has reported passenger numbers up 3% to 2.88m during Q2 2019, with sales revenue up 2% to £263m. • The founder of the recently busted short-break operator Super Break, Gordon Miller is hoping to resurrect the brand and is calling for the backing of agents’. • Rail passengers in the UK are set to be hit by further price hikes next year. The increase will be based on the Retail Prices Index (RPI) inflation measure for July of 2.8%. • The planned strike by workers at Heathrow next week has been suspended. Disruption would have impacted the 23-24 August Bank Holiday Weekend. OTHER LEISURE: • Gaming company GVC has reported H1 numbers saying it has ‘strong operational momentum’ and that its ‘full year outlook [is] ahead of expectations.’ • GVC says net gaming revenue is up 5% on a pro-forma basis with PBT of £2.1m vs £113.8m last year. CEO Kenneth Alexander says ‘the Group’s performance in the first half was extremely pleasing.’ • Mr Alexander says ‘the strong trading performance of the Online business means that any potential costs in 2019 associated with the new sports-betting licences in Germany are expected to be fully mitigated. With the outperformance in UK Retail, and Online and European Retail trading in-line with expectations, the Board now expects the Group to deliver full year 2019 EBITDA within a £650m-£670m range.’ • Nintendo has outspent all of its competitors during July with ad-spending reaching $3.7m, taking a 60% cut of the market. FINANCE & ECONOMICS: • The rate of inflation in the UK increased from 2.0% to 2.1% in the year to July. Analysts had been expecting a drop to 1.9%. • The NIESR says ‘underlying inflation remained unchanged at 1 per cent in the year to July 2019.’ It says ‘at the regional level, underlying inflation was highest in the North at 1.4 per cent and lowest in the South East at 0.9 per cent in the year to July 2019. • The NIESR says ‘price decreases outnumbered price increases but sharp increases in consumer services, such as housing and household services, contributed to the increase this month. On this basis, we expect CPI inflation to settle just above the Bank of England’s target of 2 per cent in the coming year.’ • Germany’s economy shrank in Q2 this year by 0.1%. • The Evening Standard reports that London house prices have now registered their longest run of declines in more than 25yrs. Prices last fell this consistently in the 1990-1993 period. Prices are down by 2.7% in the year to June. • Telegraph reports that Britain’s car industry ‘has braced’ for the impact of Brexit once already this year, running up costs and suffering disruption when the country failed to leave the EU as expected on March 29. It quotes the SMMT as saying ‘we can never be ready for no deal. The most obvious worry is tariffs.’ • Sterling little changed at €1.0812 and $1.2054. Oil down a dollar and a half at $59.11. UK 10yr gilt yield down by 5bps at 0.49%. World markets all lower yesterday on recession concerns. Far East down in Thursday trade. • Brexit & politics: o Boris Johnson has accused MPs ‘who think they can block Brexit’ of being in a ‘terrible collaboration’ with the EU. o PM alleges EU is less willing to compromise because of the Tory Party’s current internal disagreements. Could be buck-passing before the buck has even arrived. o MPs have called the PM’s comments a ‘big deflection exercise’. o Ex-chancellor Philip Hammond says demanding the total abolition of the backstop effectively scuppers any chance of a deal. o Independent quotes ‘EU source’ as saying there is no basis for agreement between the UK & the EU. o Nancy Polosi has said that there is no chance of a US-UK trade deal getting through Congress if Brexit undermines the Good Friday Agreement. o The head of US farming loby The American Farm Bureau, Zippy Duvall, has said that the UK must accept US health standards re food if there is to be a free trade agreement. START THE DAY WITH A SONG: Yesterday’s song was IDLES with Danny Nedelko. Today who sang: It’s coming sometime and maybe, I give a wrong time, stop a traffic line Your future dream has sure been seen through RETAIL WITH NICK BUBB:
Sports Direct: The 10% fall in the Sports Direct share price yesterday was a pretty savage response to the news that the company’s auditor has resigned, but most of that fall happened in the first couple of hours of trading and the price stabilised in the afternoon (as the wider market as falling on the back of the slump on Wall Street). The share buyback programme was not especially supportive (251,000 shares, not much more than 10% of the total trading volume, at c219p a share), so the market may have been satisfied by the hopeless statement at 2.40pm that Grant Thornton had decided to step down because the company wanted to appoint a “Big 4” auditor in the long-term (not that any of them would touch Sports Direct with a bargepole) and that “The Board are comfortable with Sports Direct’s accounts for the period ended 28 April 2019 and believe a fully robust audit was carried out of the
Planet ONS Watch: In “the real world”, as per the overall BRC-KPMG figures for July (the 4 weeks to July 27th), Retail Sales were pretty flat last month, given the impact of last year’s heatwave on supermarket trade, but we will find out at 9.30am this morning what “seasonally adjusted” life was like on the High Street on that strange parallel world, the Planet ONS (aka the world of the Office of National Statistics in Newport), via their official Retail Sales figures…Now, City economists (who still, unaccountably, treat the dubious-looking ONS figures as the gospel truth) generally expect a small rise of 0.1% in month-on-month seasonally adjusted sales volumes, but Capital Economics have pencilled in a 0.5% rise in July (to give year-on-year volume growth of 3.3%), for what it’s worth. We will be focusing, as usual, on the year-on-year, non-seasonally adjusted sales value figures and Asda Watch: On the back of the Wal-Mart Q2 results in the US, the Asda Q2 update will be out at lunchtime. With the Q1 in mid-May, there was talk of a potential Asda IPO in the future and on an Easter-adjusted basis the calendar Q1 sales outcome was said to be up 0.5% LFL, but Q2 will have been more difficult, given tougher comps, so it will be interesting to see how the Asda PR team spin the outcome and what is said about the supermarket industry volume/price inflation outlook |
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