Langton Capital – 2016-10-25 – Whitbread H1, holiday intentions, costs & other:
Whitbread H1, holiday intentions, costs & other:
A DAY IN THE LIFE:
Langton is on a beach still paying stupid rates for its Euros. On to the news:
WHITBREAD H1 RESULTS:
• WTB H1 results. Numbers said to be in-line but slide in Costa returns (on increased investment) may come as a surprise to some
• WTB H1. Says Premier operating profit +8.9% at £271.5m but Costa operating profit down 4.0% at £64.6m.
• WTB says H1 reduced Costa profit performance is ‘due to increased investments in the first half’.
• Whitbread reports H1 numbers to 1 Sept. Says has ‘strong fundamentals’ & trading is ‘in line with expectations’
• WTB reports total H1 revenue of £1.556bn (+8.1%) with underlying PBT of £307m (+5.4%). EPS is 133.9p (underlying), up some 5.2%
• WTB H1 dividend 29.9p (+4.9%). Group says is ‘winning market share in both Premier Inn and Costa’.
• WTB says has seen Premier Inn total sales growth of 8.9% and like for like sales up 2.4%. Costa is +10.7% and +2.3% LfL in UK.
• WTB H1. Reports ‘exceptional items and non underlying adjustments before tax are a cost of £43.4 million (2015/16: cost £36.4 million) predominantly relating to the estimated costs associated with Premier Inn International’s withdrawal from India and South East Asia’.
• WTB has ‘strong balance sheet with H1 net debt of £988.2 million (at year end 2015/16: £909.8 million) with leverage maintained.’ CEO Alison Brittain reports ‘this is another good set of results from Whitbread and we continue to deliver strong growth, with total Group sales increasing 8.1% to £1.6 billion. Our core brands of Premier Inn and Costa continue to win market share with total sales growing 8.9% and 10.7% and like for like sales up 2.4% and 2.3% respectively.’
• WTB CEO Alison Britain reports ‘we will be smoothing the phasing of our openings this year and plan to open c.3,700 new UK Premier Inn rooms and 230-250 new coffee shops worldwide.’ She adds ‘internationally, in Premier Inn we are focusing on the Middle East and German markets’.
• WTB says FY should be ‘in line with full year expectations’ despite ‘uncertainty in the UK’s economic outlook’.
PUB, RESTAURANT & DRINKS PRODUCERS:
• Brewdog is to arrange for trading in its shares today, 25 October. The group says it has 50k shareholders worldwide. Brewdog says ‘every 12 months we hold a share trading day, where existing Equity Punks can sell their shares if they choose to, which gives others the opportunity to invest. This year’s trading day is scheduled for tomorrow 25th October 10am-3pm.’
• Government to review gaming machines. Says Tracey Crouch, Parliamentary Under-Secretary of State for the Department for Culture, Media and Sport, calls for evidence on the review of gaming machines and social responsibility requirements across the gambling industry. The government will review maximum stake and prize limits for gaming machines across all premises licensed under the Gambling Act 2005. The under-secretary says ‘in launching this review I want to ensure that legislation strikes the right balance between allowing the industry to grow and contribute to the economy whilst ensuring consumers and communities are protected’.
• Hi-Spirits has agreed to distribute New Zealand distiller Rogue Society Distilling Co.’s Scapegrace Gin in the UK. Hi-Spirits managing director Dan Bolton said: ‘Scapegrace is a great addition to our gin portfolio, as a premium spirit that carries New Zealand’s reputation for clean, fresh flavours with it… Consumers increasingly enjoy a range of gins and gin serves in their drinking repertoire.’ Gin sales continue to grow healthily in the UK and analyst Mintel predicts sales will top £1.3bn by 2020, from an estimated £1bn in 2015.
• New analysis has shown that there are more fast food outlets than average in deprived areas of the UK where obesity levels in children are higher. More people now view eating out and ordering takeaways as the norm rather than a treat, although some fast food can be high in calories, saturated fat and salt, and low in fibre. Figures from Public Health England show that a fifth of adults and children eat takeaway meals at home once a week or more and 75% of people reported eating out or buying takeaway in 2014 (compared to 68% in 2010).
• Fleuret’s comments that transactional volumes in the quarter following Brexit were ‘a little subdued’, although there is still investor appetite in the Leisure sector. The business property valuer adds that ‘an interesting and busy period lies ahead’ for tied tenants and tenanted pub companies with more than 500 pubs as the industry waits to assess the impact of the pubs code, while the regional variations in updated Rateable Values spells potential trouble for London businesses.
• Carluccio’s intends to create 500 jobs and 10 to 12 new restaurants per year over the next five years, driven by a multi-million pound investment from majority owner, the Jagtiani Foundation.
• Brigid Simmonds of the BBPA has said the trade body supports the use of amusement machines, which are ‘important to the economics of many pubs’. With the Department for Culture, Media & Sport set to conduct a review into the use of gaming machines in pubs, the BBPA suggests that the prize levels in such machines do not meet the expectations of the consumer.
• The Scottish government has been permitted to continue with its proposed 50p per unit minimum alcohol pricing.
• Iraq’s parliament has passed a law banning the import, production, and sale of alcohol in a move that critics say discriminates against the country’s Christian community.
LEISURE TRAVEL & HOTELS:
• Online travel specialist On the Beach expects full year underlying PBT to be ‘marginally ahead’ of expectations, although revenue growth in the UK has been slower than expected (+12% to £70m). Despite trading ‘well in a difficult market’, the group has had to ‘drive efficiency’ to increase after-marketing revenue growth by 18% to £36m. The past year has seen terrorist attacks, the failure of Low Cost Travel Group, and the fall in value of sterling, but demand for beach holidays has remained ‘resilient’ according to the travel group, and it continues to take UK market share while launching international sites in Sweden and Norway. On the Beach will announce its audited Preliminary Results on 6 December 2016.
• Simon Cooper, Chief Executive of On the Beach Group plc, commented: ‘FY16 has been an extraordinary and unprecedented year for the travel industry. Amidst these difficult conditions, the Group’s solid revenue and profit performance is testament to the strength and flexibility of our agile business model and this has enabled us to deliver a year of highly profitable growth.
• ‘In spite of the challenges faced, the Group has continued to grow market share and this has been delivered by executing a simple strategy of optimising our customer proposition to increase conversion and improve margin. The successful execution of this strategy provides further evidence of our ability to steal market share from traditional tour operators.’
• Chinese conglomerate HNA has purchased a 25% stake in hotel group Hilton for $6.5bn, marking the latest move in the trend of Chinese investment in overseas tourism businesses. Hilton’s 13 brands include Conrad Hotels and Resorts, Curio and Double Tree and the group boasts 4,700 managed, franchised, owned and leased hotels and timeshares in 104 countries. HNA itself has stated its aim to become a ‘global tourism business’ and has recently agreed to acquire Carlson Hotels, owner of the Radisson and Park Plaza brands. ‘We believe this mutually beneficial relationship will open new opportunities for our brands and guests around the world, particularly in light of HNA’s strong position in the fast-growing Chinese travel and tourism market, the largest outbound travel and tourism market in the world,’ said Hilton chief executive Christopher J Nassetta.
• The US hotel industry posted flat occupancy at 71.1% for the third quarter of 2016, while ADR was up 3.4% at $127.19 and RevPAR grew by 3.3% to $90.48. ‘This was the slowest third quarter for RevPAR growth since 2009, but RevPAR did hit an all-time high in absolute value,’ said Bobby Bowers, STR’s senior VP for operations. ‘Year-to-date supply growth is at 1.5%, which is the highest through the first nine months of a year since 2010. And even though we are still selling a record number of rooms, this slowing performance will be the new normal as rate is now the sole driver of RevPAR growth.’
• A Post Office Travel Money report finds that there remains a sustained appetite for overseas travel despite the weak pound. Analysis of sales reveals healthy growth for 17 of its 20 best-selling currencies – led by the euro (+14%) and US dollar (+16%).
• ITV will cut 120 jobs as part of a programme set out earlier to reduce costs by £25m to counter the uncertainty created by the Brexit vote. The cuts equal 2% of the media group’s 6,000 workforce and ITV expects a 1% drop in net advertising revenue in the first nine months of the year.
FINANCE & MARKETS:
• The British public’s anticipation of inflation next year posted its sharpest jump in more than a decade this month, per a survey by YouGov. The survey, for US bank Citi, showed that in October, people on average expected inflation in 12 months’ time to be at 2.5%, up from September’s expectation of 1.7%, driven by rising import costs.
• The latest CBI Industrial Trends Survey shows manufacturing exports have received a significant boost from the weakness of sterling. Export volumes grew at their fastest pace for two and a half years in the three months to October and are expected to rise further over the next three months, although manufacturers added that a potential shortfall in ‘skilled labour availability’ could limit output.
• US Chicago Fed boss Charles Evans says US economy is ‘strengthening’ but says it is unlikely to break out of its moderate growth path
• World markets: UK down yesterday, Europe mostly higher. US up but Asia mostly down in Tuesday trade
• Oil a shade lower. Brent changing hands at around $51.30 per barrel
• Sterling little changed, trading at around $1.222 per US$
YESTERDAY IN A NUTSHELL – SELECTION OF TWEETS, LIVE TWEETS ON WEBSITE:
• Fulham Shore has exchanged on two new Franco Manca restaurants in Richmond and in Putney for opening in March/April 2017
• Fulham Shore to have 40+ Franco Manca’s by early-2018 with another 10 or more Real Greeks also in operation
• McDonald’s global sales rose by 3.5% in the third quarter to 30 September as operating income grew by 5%
• Fleurets has reported a 23% rise in property viewings in Qtr post EU referendum, possibly because of continuing low interest rates
• Tesco is matching Argos on the prices of more than 8,000 products for Christmas as part of the group’s Brand Guarantee scheme.
• VisitBritain says UK welcomed highest ever number of inbound tourists in August this year, with the 3.8m visits marking a 2% rise
• Post Office Money has warned that the pound will be worth at least 15% less for travellers to nearly 20 of the world’s most popular destinations
• Government borrowing rose sharply in September to £10.6bn per the ONS. Figure was £1.3bn higher than same month in 2015