Langton Capital – 2022-01-07 – C&C Group, December PMIs, inflation, labour, state aid & other:
C&C Group, December PMIs, inflation, labour, state aid & other:A DAY IN THE LIFE: I find that I have taken against the word ‘vast’. It might be irrational but it’s particularly a problem when it’s pronounced with a couple of extra As and an R in the middle and, though his pronunciation is halfway reasonable, it was Prof Brian Cox that pushed me over the edge. Because, and I accept he has an excuse, I suppose, everything in the universe is vast so why bother to tell us? Or at least mix it up a bit? Maybe the empty void between us and the Andromeda Galaxy could be described as ‘rather big’ or comfortably ‘roomy’? Indeed, space could be ‘spacious’ or ‘boundless’ or ‘enormous’ or ‘bloody huge’ but the honourable prof must have got the message across because, when Kazakhstan was described as vast on the news, it prompted me to shout that everything’s relative. The Central Asian country is big versus my garden but rather small if you consider the distance between us and the neighbouring solar system let alone the next galaxy. All of which confused the dog who’s only every interested in where his next meal is coming from. Deep, huh? On to the news: LANGTON EMAIL: The Free Email is now written in short form. Full stories are in the Premium Email. Reply to this email if you would like to upgrade. See Twitter for in-day comment. Let us know if you would like an example of the Premium Email or to comment on the new format. Prices for the Premium, unchanged for 2yrs, are £295 for one subscription, £495 for multiple, both plus VAT. Reply to this email to order & request invoice. Or sign up for easy in, easy out monthly option HERE PUBS & RESTAURANTS: Markit’s Services PMI for December: As anticipated, Markit’s Services PMI measure for December showed a marked slowdown compared with November as a result of the appearance of the Omicron variant and the increased Covid restrictions imposed via Plan B as a result. Markit says ‘UK service providers highlighted a considerable reversal of fortunes during December as the Omicron variant led to a steep fall in spending on face-to-face consumer services, escalating business uncertainty and disruptions due to staff absences.’ It reports a PMI of 53.6 for last month compared with 58.5 in November. • See premium. Reply to this email to upgrade. Inflation & costs: Markit reports that ‘softer demand conditions meant that strains on business capacity were less marked [in December] than in November.’ This is good as far as it goes. But Markit adds ‘higher prices for energy, fuel, transport and raw materials led to another sharp increase in average cost burdens in December. It flips the other way again when it says ‘measured overall, the rate of input price inflation eased from November’s record high and was the slowest for three months. Similarly, average prices charged by service sector companies increased rapidly in December but the speed of inflation decelerated for the first time since August.’ • See premium. Reply to this email to upgrade. Meanwhile, chancellor Rishi Sunak has says he “understands people’s anxiety… about rising prices” and adds he will “always be listening” to concerns. • See premium. Reply to this email to upgrade. Labour supply (and cost): Markit says ‘job creation remained relatively strong’ in the service sector, saying ‘strong employment growth was maintained across the service economy at the end of 2021, despite shortages of available candidates and some reports citing the need to cut overheads. Around 26% of the survey panel reported an increase in workforce numbers, compared to only 10% that signalled a decline.’ • See premium. Reply to this email to upgrade. The consumer: In addition to rising mortgage and food costs, the hit from higher fuel bills and NIC increases in April have the potential to dampen consumer spending. The PM said leaving the EU would allow the UK to cut the 5% VAT levied on fuel but has since said that this isn’t going to happen. The NIC rise (for both employers and employees) will come into force on the first day of the new tax year, 6 April, but there are some senior Tories calling for the Chancellor to make a U-turn. • See premium. Reply to this email to upgrade. Government help: Michael Kill, CEO of the Night Time Industries Association, has said that the government support available to hospitality operators falls far short of what will be needed to see them through the current slowdown prompted by the Omicron variant and the move to Plan B. he says that the grant scheme for businesses is a “drop in the ocean” and it will do little to prevent financial collapses. • See premium. Reply to this email to upgrade. COMPANY & OTHER NEWS: C&C Group points to disappointing trading in December. The group has updated on Q4 trading saying that its trading has been ‘impacted by renewed COVID-19 restrictions.’ The company, which updated in late October with its H1 numbers, says that it had at that time expected FY2022 Operating Profit to be in the range of €50-€55m. it says ‘trading in Q3 (September to November), was modestly ahead of expectation’ as a result of ‘positive consumer sentiment and the return of customers to on-trade hospitality, driving increased profit and cash generation in the Q3, demonstrating the inherent strength of C&C’s business model’ as well as cost savings and a price increase. C&C goes on to say ‘in December 2021, trading conditions for our on-trade business were significantly impacted by renewed government restrictions across the UK and Ireland. In the month of December, the key festive trading period, C&C traded directly with 81% of on-trade outlets vs FY2020, delivering 64% of the volume against an expectation of 90% and 90% respectively. While December’s performance was consequently behind expectation, the Group generated a modest profit for the month.’ It says ‘the operating profit outcome for the H2 FY2022 period will be affected by the nature, extent and duration of government restrictions. Consequently, C&C will provide an updated operating profit range in its FY2022 pre close trading statement in March.’ • See premium. Reply to this email to upgrade. Deliveroo reports demand for vegan food was up 117% over the past year, with this first week of January 2021 seeing a 153% rise in searches for ‘vegan’ food on its app. The delivery company is also reported set to open a high street restaurant in order to ‘deepen staff expertise and understanding of restaurant management’. Constellation Brands reported Q3 sales down to $2.32 billion from $2.44 billion and net income declined to $470.8 million from $1.28 billion. Beer sales rose 4% to $1.75 billion. Wine and spirits sales dropped by 25% to $568 million. Union des Maisons de Champagne (UMC) president, Jean-Marie Barillère, says that shipments could be close to 320 million bottles for 2021. Barillère said the figures were driven by ‘a strong performance in the ‘Anglo-Saxon’ countries: the UK, Canada, USA and Australia. Germany and Spain too’. Arc Inspirations has launched plant-based dedicated menus across its BOX, Manahatta and Banyan venues for Veganuary 2022. All food is 50% off (on selected days, when you prebook your table) throughout January. Bar chain Darwin & Wallace has launched its Wildfarmed sourdough bread across all of its nine locations. Gousto, the meal-kits business, is reported to have secured investment of $100m, which values the business at some $1.7bn. CEO Timo Boldt comments ‘we just want to accelerate the momentum that we have, all the mega-trends are in our favour’ and adds ‘we see ourselves as a data company that loves food. This deal made sense on so many levels. We’re delighted.’ The company is backed by tech investor Softbank’s Vision Funds. Gousto reported revenues of £189m in its 2020 financial year, up from £83m in the prior year. The group made losses of £18.2m and £9m in 2020 and 2019 respectively. LEISURE TRAVEL & HOTELS: Transport Secretary Grant Shapps says the current Covid testing system for people travelling to England has ‘outlived its usefulness’ as Omicron is now ‘widespread and worldwide’. Pre-departure tests will end for fully vaccinated travellers and day two PCRs will be replaced by lateral flow tests. Scotland yesterday announced that it would pull its restrictions into line with the rest of the UK.fr • See premium. Reply to this email to upgrade. Kuoni CEO Derek Jones has predicted travel will be 90% back to 2019 levels before the end of the spring following the easing of travel restrictions. The company said clients who had already asked for holiday quotes and may have been hesitant about confirming their bookings were now calling up because they had the confidence to go ahead with their travel plans. Winter sports insurance will now be mandatory for people using Italian ski slopes, with PlanetSKI website saying ‘the penalty for not doing so will be a fine up to €150 and the withdrawal of the ski pass.’ Tui has reached a settlement with families of holidaymakers caught up in the Tunisia beach terror attack in 2015. The civil case was brought on behalf of 83 victims of the attack following the inquest into the deaths of 30 British holidaymakers. Norwegian Cruise Line has cancelled sailings on six more ships following the cancellation of two cruises earlier this week ‘due to Covid related circumstances’ and that ‘ongoing travel restrictions’ has meant it has had to modify other sailings. Marella Cruises has had to cancel a second successive itinerary on Marella Discovery over recently-introduced Covid measures in Barbados. All affected passengers have been offered the choice of changing their booking with an incentive attached or a full refund. The outlook for business travel remains challenging. STR reports that a poll of global travellers in November showed 44 per cent were less likely to travel for business in November compared to 39 per cent in July. STR says that 30 per cent of respondents would be more interested in the idea of a “workation” than they were before the pandemic. OTHER LEISURE: Entain’s Ladbrokes business collected some £102m in furlough payments in 2020 reports the BBC. It says ‘since the pandemic began parent company Entain has actually increased revenues, driven by strong online growth. Entain said the money protected 14,000 jobs, and is “under review.’ FINANCE & MARKETS: Markit yesterday reported its December composite PMI for the UK economy as a whole saying that ‘weaker momentum in the service economy more than offset a quicker pace of recovery among manufacturing companies.’ It reported 53.6 for December, down from 57.6 in November. See Pubs & Restaurants above for comment on the Services PMI. • See premium. Reply to this email to upgrade. The BCC’s quarterly survey suggests that stalling sales growth associated with the “mounting headwinds” of inflation and a shortage of skilled workers could prove problematic for the economy. It adds that the ‘persistent weakness in cash flow is troubling because it leaves businesses more exposed to the economic impact of Omicron, rising inflation and potential further restrictions.’ • See premium. Reply to this email to upgrade. Bloomberg reports that ‘trucking companies are falling foul of new IT systems policing goods crossing the English Channel’. It says ‘many hauliers report setbacks including reference codes not being accepted.’ The Halifax has updated on house prices in December saying that house prices on average were up by 9.8% in calendar 2021 to hit a new record high of £276,091. It says this is the ‘largest annual cash [not percentage] rise since March 2003’. • See premium. Reply to this email to upgrade. Sterling up at $1.3544 and €1.1982. Oil price higher at $82.73. UK 10yr gilt yield sharply higher at 1.15% (up 7bps). World markets broadly lower yesterday but London set to open some 3pts higher as at 7.10am. RETAIL WITH NICK BUBB: • See premium. Reply to this email to upgrade. |
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