Propel Morning Briefing Mast HeadAccess Banner  
Propel Morning Briefing Mast Head Propel's LinkedIn LinkPaul's Twitter Link Paul's X Link

McCain Banner
Morning Briefing for pub, restaurant and food wervice operators

Mon 12th Feb 2018 - Update: Consumer spending downturn, Cineworld, Heineken
Consumer spending falls to its lowest in five years: Britons cut their January spending on consumer goods for the first time in five years as concerns about household finances and the wider economy in the year ahead begin to bite. Worried households squeezed their January spending for the first time since 2013, as the lure of the annual post-Christmas sales failed to lighten Britain’s consumer gloom, according to the latest data from Visa’s consumer index. The report showed household spending fell 1.2% compared with the year before. The spending slump followed a 4% decline in high street shopping and a slowdown for online retailers to just 1.5% above last year. Even the spending boom on nights out and holidays, which has defied economic worries in recent years, cooled in the first weeks of 2018 with slower growth of 3.7%. It is the eighth drop in monthly figures over the past nine months. Visa chief commercial officer Mark Antipof said clothing, furniture and household goods “bore the brunt of consumers’ caution yet again”. A report from Retail Economics revealed households’ rising concern over their personal finances and the wider economy. The report, undertaken alongside NatWest, showed a third of households expected their personal finances to weaken in the next 12 months compared with last year. This rate is higher among less affluent households, where 40% expect their financial position to deteriorate as the pressure of inflation takes its toll. Households are most worried about “rising prices in shops”, while 24% said a “weakening economy” was their top concern as Britain’s exit from the EU draws nearer.
Douglas Jack – back Cineworld management to deliver Regal performance: Peel Hunt leisure analyst Douglas Jack has said reinvigorating the Regal estate and driving extra synergies should boost Cineworld’s rating over the next two years. Issuing a ‘Buy’ note on the shares with a target price of 270p, Jack said: “We have not changed our forecasts for the UK or Europe, but are adding Regal Entertainment Group, in North America, which should join Cineworld on 3 March. We forecast Regal grows turnover per screen by 0.5% to 1.0% in 2018E and 2019E (versus an estimated 0.5% compound annual growth rate between 2014 and 2017E) before the benefit of upgrade project capex. Our forecasts assume $50m of synergies are achieved in 2018E, and a further $50m are achieved in 2019E. The $60m of central cost, capex and procurement savings should occur first, and be achieved. The $40m of revenue synergies will take longer, but could be comfortably exceeded, due to the potential for Cineworld to roll out a subscription service and Cineworld’s track record of driving up online booking revenues and the conversion of those revenues into profits. We expect this to happen at Regal. Management will also target increasing advertising revenue. Cineworld expects to stimulate growth in Regal by applying its UK refurbishment model. Regal has a committed expansion pipeline, which we forecast to continue at 48 new screens per annum – we expect 85% of capex to be on existing sites. Management believes a two-year payback is possible on the first 50 upgrade projects – these represent 10% of sites, but 25% to 30% of Ebitda. Management expects to retain the current dividend payout ratio. This equates to a dividend yield of 6% based on 2019E earnings due to a combination of (27%) share price weakness since the Regal deal was announced and strong forecast earnings growth in 2018E and 2019E. Based on 2019E, the shares have de-rated to levels last seen in 2012. There is a lot of extra equity in circulation and the US market is viewed as being ex-growth. However, management has a strong track record for generating good returns from acquisitions – we believe reinvigorating the Regal estate and driving extra synergies should boost the rating over the next two years.”
Heineken reports ‘strong’ year: Heineken has reported consolidated beer volume grew 4.6% organically in its fourth quarter with full-year growth of 3%. Consolidated beer volumes in Europe were up 0.6% in the fourth quarter and 0.2% for the full year. Cider volume increased by low single digit to 4.9 million hectolitres but there was a high single digit decline in the UK, where volumes were impacted by a partial delisting. Craft and variety volume grew double digit supported by the strong performance of the international craft beers as well as local craft propositions. In particular, Affligem and Mort Subite in France, and Lagunitas both in the UK and US contributed to category growth. Chief executive Jean-François van Boxmeer said: ”We delivered strong results in 2017, with all regions contributing to organic growth in volume, revenue and operating profit. The Heineken brand performed very well and Heineken 0.0 was launched in 16 countries. During the year, we became the second largest beer company in Brazil with the acquisition of Brasil Kirin, we bought 1,900 pubs from Punch in the UK and acquired full ownership of Lagunitas, where we strongly believe in the expansion of the brand as an IPA of reference outside its core US market. We also made good progress with our sustainability agenda. We have already surpassed our 2020 carbon dioxide emissions target and we have set new ambitious objectives for 2030 with our ‘Drop the C’ programme. We expect the environment will continue to be marked by volatility and uncertainty. We are committed to long-term value creation and will continue to strive for superior top line growth whilst working on improving our operating profit margin. In the coming years, we expect this to be driven by Heineken as well as our portfolio of international brands, craft and variety, low and no-alcohol and cider, with a focus on premiumisation, combined with revenue and cost management initiatives. For 2018, excluding major unforeseen macro economic and political developments, we expect to deliver an operating profit margin expansion of around 25 basis points. This includes a residual dilutive effect on margins from the acquisition of Brasil Kirin, whose integration and results are very encouraging.”

Return to Archive Click Here to Return to the Archive Listing
Punch Taverns Link
Return to Archive Click Here to Return to the Archive Listing
Propel Premium
Pernod Mailibu Banner
Meaningful Vision Banner
Mccain Banner
Casula Dining Banner
Heineken SmartDispense Banner
Contract Furniture Group Banner
Pepper Banner
Heinz Banner
Alcumus Banner
Santa Maria Banner
Cruzcampo Banner
Propel Banner
Nutritics Banner
Heinz Banner
Zonal Banner
Access Banner
Propel Banner
Christie & Co Banner
Sideways Banner
Kurve Banner
CACI Banner
Airship – Toggle Banner
Wireless Social Banner
Payments Managed Banner
Deliverect Banner
Zonal Banner
HGEM Banner
Pepper Banner