tip off

Bricks and mortar, fleecing Greece, grog goes with Coke

Bricks and mortar. Production of clay bricks, concrete and pre-mixed cement are very good indicators of the health of the construction sector. It was weak in the last quarter of 2009. Figures today from the ABS tell us that the December quarter saw 335 million clay bricks made, the lowest figure for that period for years. It was down on the 385 million for the same quarter of 2008. The first home buyers new home construction tax breaks must have cushioned a bigger fall. Pre-mixed concrete production was likewise weak, 5.905 million cubic metres, down from 6.419 million in the last three months of 2008. It did however top the 5.625 million cubic metres reported in the same period of 2004. Beer production didn’t change from the December quarter of 2008 at 488 megalitres. That was above the 473 ML for the December, 2007 period. Gas production was up on the same quarter of 2008, electricity production was lower.

Fleecing Greece. Who’d be a master of the universe these days? Bagged for almost destroying the world economy, bagged for getting paid gazillions before the crash and afterwards, now they are being fingered as the ‘Vampire squid” who are destroying the euro, Greece and life as we know in inside the eurozone. According to The Financial Times, “German chancellor Angela Merkel has sharply criticised global investment banks that may have helped a number of Greek governments to disguise mounting budgetary problems over the years. “It would be a disgrace if it turned out to be true that banks that already pushed us to the edge of the abyss were also party to falsifying Greek statistics.” The FT also published a very good backgrounder under the headline “Anger grows over Athens arrangers”.

And Bloomberg reported that Goldman Sachs “managed $15 billion of bond sales for Greece after arranging a currency swap that allowed the government to hide the extent of its deficit.” And that “No mention was made of the swap in sales documents for the securities in at least six of the 10 sales the bank arranged for Greece since the transaction. The New York-based firm helped Greece raise $1 billion of off-balance-sheet funding in 2002 through the swap, which European Union regulators said they knew nothing about until recent days.” Dearie me, a lack of disclosure. How very Goldman Sachs.

Athens bomb explained. And that bomb explosion outside a JP Morgan office in Athens referred to by Guy Rundle yesterday had a more sinister explanation. According to Reuters and the FT, “Greece’s socialist government last month re-opened an official investigation into JP Morgan’s controversial sale in 2007 of a €280m structured bond to four Greek state pension funds at an inflated price. JP Morgan denied any wrongdoing and eventually bought back the bond at face value.”

America’s reality, homes up, output up, repos up. Well, US new home construction sort of perked up in January (February will see a big fall because of the cold and snowy weather in the east and Midwest), industrial production continued rising, thanks in part to higher output of coal mines and utilities supplying energy during winter; so markets reckon America’s recovery remains on track. But the number of building permits issued last month for new home construction fell, which is a concern, despite the maintenance of the home buying subsidy. US home foreclosure pressures sort of eased in January. RealtyTrac reported that foreclosure filings fell by nearly 10% in January from December, but filings rose 15% from January, 2008 and the number of actual repossessions in the month jumped 31% to 87,648, or around 2,870 a day, or around 47 an hour across the US. That makes it hard to understand why anyone would build a new home when you can buy one so easily.

*Hic* This segment has been brought to you by the makers and pushers of various grog products, namely Fosters, Diageo, Coca Cola Amatil and SABMIller. Remember to drink responsibility when trying to clear a hangover. The bottom line from the reports below that the drop in consumption of Ready To Drink products last year caused by the Federal Government’s alcopops tax increase, has faded and growth is back, plus other grogs are growing, such as hard spirits, premium beers and cider.

Easy booze. Growth back in ready to drinks, cider sales soaring, hard liquor sales up. The impact of the Rudd Government’s raising of the tax on Ready To Drink products seems to have faded, or rather, not been followed up by more price rises (that’s if the Government was serious) on other liquor products. CUB’s beer volume fell 1% in Australia in the six months to December and 1.8% around the world. Beer profits though rose 6.6% because it put up prices and drinkers headed for more expensive products than just draught beer. CUB said that “cider continues to be the fastest growing alcohol category in Australia and CUB’s cider net sales revenue increased 13.8%.” That’s happened since the alcopops tax.

But it’s just not Fosters. Global grog giant, Diageo of Britain said in its interim profit report last week that in Australia “ready to drink grew 1% driven by a mixture of innovation and a return to growth of the segment. The largest spirits brands of Bundaberg, Johnnie Walker and Smirnoff all grew and spirits in total grew net sales 5%. Diageo maintained its share of spirits at 30%. Price increases were taken on core spirits and there was a 25% increase in marketing spend, primarily behind innovations Bundaberg Red, Baileys with a hint of coffee and Smirnoff Cocktails. Bundaberg rum grew net sales 11% and enjoyed strong share growth in both volume and value despite lapping a period of strong growth last year following the ready to drink tax increase.” Sounds like Diageo has also survived the tax increase.

Grog goes with Coke. Believe it or not but the company that sells Coca Cola and Fanta and Mount Franklin water is rapidly becoming a grog pusher. Pacific Beverages is the joint venture between, Coca Cola Amatil and SABMiller. It’s doing very well in Australia as Coca Cola Amatil revealed in its 2009 results yesterday. “Pacific Beverages’ beer brands delivered strong volume growth of almost 50% for the year, and now account for over 9% of the Australian premium packaged beer market by volume and value.” The JV had a small loss “was more than offset by the earnings generated by the Australian Beverage business from the manufacture and distribution of the Jim Beam range of alcoholic ready-to-drink (ARTD) beverages and service fees from the distribution of Pacific beverages’ alcoholic beverages portfolio. Sales of the Jim Beam & Cola alcoholic ready-to-drink (ARTD) range increased in the second half as the business cycled the impact of the 70% excise tax increase on ARTD beverages introduced in April 2008. While full year ARTD volume declined slightly, this was more than offset by a solid increase in full spirit sales as consumers switched from ARTDs to full spirit purchases.” Oh, so drinkers paid the higher tax, and the companies were unaffected.

When will Australia get serious about liquor labelling? The UK has just published proposals to force grog companies to put health warnings on their products if they continue to refuse to do it voluntarily. Under the British proposals mandatory cigarette-style warnings would include details of how many units a bottle contained and would appear on all alcoholic drinks for sale in shops and supermarkets to deter people from binge drinking. The labels would contain five pieces of information, including a general health warning about alcohol and a reminder to drink responsibly. They should also contain a warning about the financial impact. There is an election approaching in the UK, but the warning proposals are a start. The Telegraph said five out of the six major booze companies in the UK had failed to introduce the warning labels voluntarily under a previous government proposal. And what about retailers, such as Tescos in the UK and Woolies and Coles here who push the stuff in deeply discounted offers?

Call the doctor. There’s a aneurysm in the share price of Primary Healthcare, Its ambitious expansion program has sprung a leak and the share price is tanking, down nearly 16% in the past two days since the company revealed its December half interim profit, which rose, and a higher dividend on Tuesday.  The ailment is easy to spot, the market reckons there’s a bit of rubber in the accounts at Primary, so much so the shares are now under the $5 a share to issue to big and small shareholders in mid 2009 and a second, $180 million top up and share price purchase scheme for smaller shareholders at $6.08 a share. The shares fell 66c on Tuesday and then another 19c yesterday. They hit a low of $4.54 a share. Pre-tax earnings and revenue were up to 15% under forecasts, some divisions were flat, supplier costs were cut and the profit increase reported seems to have come from a lower interest bill and nothing else. And there wasn’t much said about the company’s cash flow in the half year which looks to have fried up somewhat. And there was no full year guidance, but talk about 2011 and 2012 earnings in the commentary. Strange, X-rays and more tests, I think, nurse.

Helping Big Joe, Mark Abbott and Barney Joyce #32: The AMP’s Chief Economist, Dr Shane Oliver has produced another graph that undermines those claims by Barney, Joe and Tony/Mark that Australia is going to default on its debts if things go on (actually debt is going top peak soon and start falling). This graph shows the prospects for countries and regions, from high risk in the top right corner, to low risk in the bottom left.

dyergraph

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  • 1
    Gollum
    Posted Thursday, 18 February 2010 at 3:52 pm | Permalink

    Liquor labelling is supposed to stop binge drinking? Lets see. The purpose of binge drinking is to get drunk fast? How to do this? Drink liquor that contains a high percentage of alcohol. How to find this out? Why, you look at the percentage of alcohol! The higher the better! Damn, it’s not rocket science.

  • 2
    Malcolm Street
    Posted Thursday, 18 February 2010 at 7:16 pm | Permalink

    So investment banks were the key to enabling the previous Greek government to conceal its mounting debts, which are now a major threat to the euro and the Eurozone, which doesn’t take the same hands-off attitude to said banks as the Anglo world. Stuff-up or conspiracy? Whatever, it’s convenient.

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