Langton Capital – 2016-04-19 – SAB Miller, Vianet, Pepsi, Stock Spirits, Brexit spam & other:
A Day in the Life:
Watching the weather forecast of an evening, I’ve decided that, when it comes to our little corner of Yorkshire, damp is the new dry.
Because it might be mostly dry in other areas but, when I look at the tufts of grass sticking above the lake that we occasionally call our lawn, I have to conclude that we’re somehow special.
We’re the bit that’s excluded from the ‘mostly’. We’re the chosen bit of the country in that we seem to be getting more than our fair share of attention from the one roving rain-cloud that’s apparently sauntering up and down the A1 but which, when it gets to YO19, seems always to put down roots and stay for the remainder of the day.
But there’s no point getting steamed up about it, I suppose and I continue to learn about the world around me. It takes a lot of water, for example, to drown grass.
Anyway, it’s time for the news but if you would like to come off this email list please simply hit the unsubscribe button above. Similarly, if you are getting it forwarded and would like to go on directly or if you would like to recommend it to one of your colleagues, please just hit the subscribe button and/or suggest that your colleague does too.
PUB, RESTAURANT & DRINKS PRODUCER NEWS:
• AB InBev announces that it has received a binding offer from Asahi to acquire ‘part of SAB Miller’s European business.
• Asahi commits to buying Peroni & Grolsch in move to ease AB InBev purchase of SAB Miller business. AB says it is ‘pleased to confirm that it has accepted the binding offer from Asahi Group…to acquire certain of SABMiller plc’s European premium brands and their related businesses (excluding certain US rights), following completion of the relevant employee information and consultation processes applicable to the sale of these brands and businesses.’ The acquisition by Asahi comprises the Peroni, Grolsch and Meantime brand families and related businesses in Italy, the Netherlands, the UK and internationally. It is ‘conditional on the successful closing of the recommended acquisition of SABMiller by AB InBev as announced on 11 November 2015, which itself contains certain regulatory preconditions and conditions, and the approval by the European Commission of
• Vianet updates on FY trading, says ‘trading for the second half of the year has been as anticipated’ & profits s/be ‘broadly in line.’ Numbers should be ‘ahead of last year’s outturn of £3.18 million.’
• Vianet FY update. Says ‘the Group’s UK core beer flow monitoring including iDraught operations has strengthened its market position and maintained its contribution despite ongoing pub closures.’ CEO James Dickson reports ‘against a backdrop of ongoing pub closures and increased investment, the Group has delivered year-on-year profit growth. Importantly, there has been solid overall progress across the core businesses and the sale of Fuel Solutions will allow full focus on our Leisure and Vending businesses where the medium to long term prospects are exciting, particularly for telemetry and payment solutions for the coffee vending market.’
• Enterprise Inns yesterday bought back 25,589 of its own shares at around 100p each
• Drake & Morgan is reported to have secured a site in Manchester per the MCA.
• Pret a Manger has reported sales up by 13.9% in the year to end-2015. EBITDA rose by 14.4% to £84.2m
• Pepsi reports Q1 numbers. Revenue +3.5% organic (down 3% in reported currency), margin up 130bps organically.
• Pepsi Q1: Core EPS 89c (64c under GAAP) with core EPS growth in constant currencies of 11%. CEO Indra Noovi reports ‘we delivered strong first quarter operating results driven by balanced execution of our commercial agenda and productivity programs.’ She adds ‘our marketing initiatives and new product launches are generating solid organic top line growth, and our focus on driving greater efficiency throughout our operations contributed significantly to attractive core gross margin expansion.’
• Pepsi Q2 trading. CEO Indra Noovi says ‘we are off to a strong start to the year and that gives us added confidence in achieving our financial objectives for 2016.’
• Coffee prices trending down in the commodity markets.
• Restaurant Group shares up on vague bid stories. Share register still churning as growth investors get out, yield holders buy
• The Craft Beer Co. has seen turnover rise by 16.8% after a landmark year for the group, which now operates six sites around London and one in Brighton. The well-stocked pub group has recently signed to open in Boxpark Croydon. Founder and managing director Martin Hayes commented on The Craft Beer Co’s future: ‘As a business we’re pretty impatient, so we’ll be looking to raise the bar again in 2016/17. We’ll be concentrating on adding more sites in London, but I don’t rule out expanding outside of town. That said, being privately owned, we’ll only add sites which we think represent value to our business and serve our customers well, we’re not under pressure from shareholders or investors to add sites on to show progress or sign silly agreements.’
• The BBPA and CAMRA are working together on a new report on the impact of the Late Night Levy on the pub sector called ‘Supporting a safer night time economy’. The trade bodies urge councils and police to consider a more collaborative and cost-effective approach in dealing with late night venues. Brigid Simmonds, BBPA Chief Executive, said: ‘This new research report shows that introducing a Levy Night Levy is really a direct tax on local businesses that damages effective partnership working between the trade and other stakeholders,’ while CAMRA CEO Tim Page agreed: ‘Community pubs that provide essential services to their customers will be those that are hit hardest by a Late Night Levy.’
• Stock Spirit’s largest shareholder, Western Gate, has welcomed the exit of the spirit group’s CEO after pushing for senior management changes. ‘The new team must address the core issues the business faces – the loss of market share in Poland and the very high corporate costs, which accounted for 31% of the Company’s reported FY15 EBITDA and which we believe are mainly comprised of the UK head office costs where the Company has no major revenue generating operations.’ said Western Gate head Luis Amaral.
• The French president and Italian Prime Minister have become embroiled in an argument over whose countries produce the best wine. While Italy is the world’s largest wine producer by volume, French wines are ‘more expensive’ according to Francois Hollande.
• The value of Australian wine exports rose by 13% in the year to the end of March as the country’s premium ranges continue to gain in popularity. While exports to Japan increased by 10% to AUS$45m, the US remained Australia’s number one destination for wine by value, up 4% to $442m. Meanwhile, China overtook the United Kingdom in the second spot, increasing by 64% to $397m.
• Saga reports FY numbers to end-Jan, says seen ‘robust growth in profits’ with ‘strong free cash flow, leading to continued reduction in leverage’
• Saga FY. PBT of £211.0m (+5.2%) with EPS of 13.3p (+54.7%). Group paying full year dividend of 7.2p (vs 4.1p last year).
• Saga. In travel, group has seen ‘continued customer and profit growth across the travel businesses’. CEO Lance Batchelor reports ‘last year saw significant progress in delivering the strategy we set out in early 2015. Our core insurance and travel businesses maintained their strong growth trajectory and were enhanced by new and improving products, new routes to market and the ability to target a broader range of customers. Meanwhile, we advanced the roll-out of exciting new platforms for Saga, such as Saga Investment Services.’
• Saga re outlook. CEO says ‘I look ahead to the next period for Saga with a great deal of confidence. The year ahead will see a renewed focus on our customers and further developing the Saga brand. Whilst the customer has always been at the heart of the Saga proposition, there is more we can do to enhance our approach and build stronger relationships. We will therefore be looking closely at the whole customer journey with a view to putting more of Saga into our customers’ lives.’
• Saga. Short term outlook. Sees ‘steady profit before tax growth and ongoing customer growth, assuming a continuation of materially consistent market conditions.’
• Holiday rentals search engine HomeToGo has closed $20m in Series B funding as the Berlin-based start-up looks to expand internationally and develop its product. HomeToGo is currently operational in Germany, France, Poland, Italy, Spain, Austria, the Netherlands, Switzerland, the UK, and the US.
• Lone Star Funds has reportedly taken full ownership of coach holiday operator Shearings for an undisclosed sum.
• The Original Bowling Company has invested £350,000 in the refurbishment of its Hollywood Bowl Centre in Ashton Leisure Park. Steve Burns, CEO of the UK’s largest bowling operator, commented: ‘We’re very excited to unveil our new-look Manchester centre. We’ve evolved the brand on considerably over the last couple of years and Ashton is a great example of the future of Hollywood Bowl.’
• Netflix shares dropped more than 9% in after-hours trading on Wall Street after it predicted slower subscriber growth moving forward. Despite recently expanding into 130 additional countries, the video streaming service expects to add about 500,000 customers in the US and two million globally in the quarter to June, compared to analyst forecasts of 586,000 and 3.5 million respectively. Netflix explained the slower rate of growth is so that the group ‘can learn as [it] goes’ while rolling out across different countries.
FINANCE & MARKETS:
• Chancellor George Osborne has warned that the UK would be ‘permanently poorer’ outside the EU and the economy could lose 6% by 2030. Leave campaigners have refuted the claims as ‘absurd’ and ‘worthless’ considering the Treasury’s track record in forecasting.
• World markets: UK mixed yesterday but Europe and US closed higher. Far East mostly higher in Tuesday trade
• Oil price up over last 24hrs. Currently trading around $42.60 per barrel. Excess supply said to be lowest for some months
• New York Fed President William Dudley has said that US inflation will rise to 2% ‘over the next few years’. Says labour market better.
• NY Fed’s Dudley says Fed will remain cautious re rate rises for some time to come.