Michael Cullen speaks with forked tongue

c Emmerson 2008



Some days it is hard to take Dr Cullen seriously. Today is one of those days.

While commenting about his tax cuts this year, engineered to buy the 2008 general election he let a sly one past.

I had a loud chortle to myself when listening to a Newstalk ZB audio clip live from the exciting port metropolis of Napier, that the main reason for New Zealand's record high interest rates was the current "credit crunch" that the world was facing and we would also be facing higher food and energy prices.

It slipped his mind(who's slippery now Mike), perhaps after a chardonnay or three, that the reasons for high interest rates and other rising prices was the fault of himself only.

Let me dispel the myths Dr Cullen!

Record high government spending by Labour on wasteful social engineering schemes has pushed up our official interest rates to 8.5% up from half that before Labour began its sentence on its citizens back in 1999.

A plethora of extra taxes including : employment, ACC, fiscal drag, electricity and gas taxes has led to higher inflation and therefore increased food prices.

What is really scary though is that Cullen is set to add even more taxes onto our already burdened and beaten economy in the form of a whole host of nonsense global warming taxes.

Up to 20c a litre of petrol will be added by local and state government this year and carbon credit trading will add additional cost to everything we buy, be it a service or product. In effect it is like another GST, except we don't know how much that extra cost will be.

Allan Bollard mentioned the added inflationary costs of these GW taxes but our mainstream media seemed to have collective ignorance over these basic economics.

Cullen has strangled the economy so hard with his overburdened taxes and spending, last month taxes actually dropped by over $700 million.

Don't be fooled, Dr Cullen is a bright man, regardless of his mis management of the economy over the last 9 years.

He has a philosophically socialist agenda though, with all its attendant consequences(and expenses) and he is clearly sticking to it come hell or high water.

More than ever now we need tax cuts, they stimulate economies, especially during dark times like these.

Dr Cullen's track record is poor, his handling of the economy during economic conditions the best we have had in generations borders on the slippery. He has crowed for the last 9 years about his results, given these conditions, which he had no influence on, but now abdicates that responsibility now that the brown stuff has hit the you know what.

Hang on, if you are a socialist you can take the plaudits for something you didn't do and abdicate responsibility for your failures, all at the same time keeping a straight face.

You cant have it both ways Dr Cullen.


Related Political Animal reading

Cullen's history on tax cuts comes back to haunt him
Global Warning: Tax iceberg ahead
Carbon credit trading puts global markets at extreme risk
Global Warming: Power to the people
Wednesday Political Soup: Edition 3 2nd story down - Let them eat cake



c Political Animal 2008

Restaurant Brand's want their sales back

In the absence of any decent analysis of Restaurant Brands Ltd [RBD.NZX] sales figures by our lazy mainstream financial journos, which were released yesterday, I will have another go for this last quarter.



Changing the image at KFC has only added cost to the
business and seriously eroded margins.


RBD management seem to trumpet their KFC brand so much that is deserves yet another serving of criticism by my good self:

For the full year, total KFC sales reached a new high of $199.1million, an increase of 9.0% over the prior year and 7.7% up on a same store basis. This same store sales performance is up on the 7.1% same store growth achieved in the previous year and is the fourth consecutive year of solid same store sales growth for the brand" 2008 sales release

Lets compare current yearly KFC sales figures with the "new high" of $177 million, as stated in the 2002 annual report. In reality if you included inflation(which prudent businesses must) in the $199.1 million "new high", then current sales are still approximately $4.5 million short of the 2002 figure. I calculated inflation over the last 5 years at conservatively 3% annually.

So the trumpeting by management yesterday of KFC's performance hides the truth that less chicken is being sold at a higher revenues for the business and now lower margins because of higher business costs.

In fact, things are so bad for KFC they would actually have to increase sales to approximately $235 million dollars annually, just to show 3% annual sales growth since that last "record" was reached in 2002.

Deception seems to have reached an art form amongst RBD management.




Pizza Hut seems a lost cause in New Zealand, sales are flagging with competitors taking their market share and business costs spiraling.

Once again Pizza Hut delivered a cold and soggy mess(just like their pizzas)in the form of annual sales. $71.4 million in sales in the last year was "disappointing" to management. That has to be the understatement of the year. That sales figure was down more than 10% from last year on a 97 store count.

Meanwhile Pizza Huts competition in this market, both Hell Pizza, a division of Burger King NZ/OZ and dominant Dominoes are growing sales strongly. With even more competition due from them over the coming year.

If we do the 2002 sales comparison, Pizza hut had just over $69 million(in 2002 dollars) on a 86 store count and now sales are just 2 million more with 11 more stores in the chain. Can you see a pattern forming here?


Starbucks isn't the star RBD management
say it is. With real growth of only 3% for
the last 5 years, the brand is clearly suffering.


Surely Starbucks must be the star that management say it is?

Well, unsurprisingly, no.

With $33 million in sales this last year and a 5.6% increase on the previous year surely shareholders should be fit to leap over a KFC store in single bound on the news?

Lets time warp back to 2002 again. With annual sales of $18 million, on a store count of 29, one might assume that the $33 million latest annual sales looks excellent but you would be slightly wrong again colonel.

With same store sales of $620,689.00 per store back in 2002 vs $733,333.00 for the latest annual period and factoring in the same conservative 3% annual inflation that I applied to the KFC scenario, that gives a figure in 2008 dollars of $713,792.00 per same store sales. The difference, being a $19,541.00 per store increase after factoring in 5 years of inflation.

This is a growth rate in same store sales for Starbucks of less than 3%, over the whole 5 years.
Again, with increased business costs factored in, margins are as thin as Pizza Hut toppings and with more stores since 2002, costs are manifold times bigger. So Starbuck's margins, like RBD's other brands, are now less than they were 5 years ago.

I have previously canvased the poor service and bad management at RBD and that clearly still applies, and I'm not about to repeat myself again but things really need to change if the company is going to survive.

The sales might be increasing at RBD's brands but that doesn't equate into more food being sold, better margins and therefore increased profit.

Shareholders must look to the long term and decide whether a company that is earning considerably less than it did 10 years ago, and trumpets current sales figures that lack intellectual and financial rigour, is capable of achieving different results over the next ten years, in whatever guise it takes.


Restaurant Brands @ Share Investor


Most Outstanding Stock of 2010: Restaurant Brands Ltd
Restaurant Brands Ltd: KFC has finally cracked it
Restaurant Brands: KFC Sales Figures Explained - Part 2
Finger Lick'n Good Management
Chart of the Week: Restaurant Brands Ltd
Long Term View: Restaurant Brands Ltd
Stock of Week: Restaurant Brands Ltd
Restaurant Brands: Buy or Sell ?
Pizza Hut sell-off provide opportunities all-round
Danny Diab & Restaurant Brands
2008-2009 KFC sales figures mislead investors
KFC Finally Flying
Starbuck's New Zealand Cup doesn't runneth over
RBD gives KFC a push
McDonald's playing chicken with KFC
Restaurant Brand's Pizza Hut faces increasing competition
RBD sales analysis
RBD saga continues: CEO leaves
The secret recipe is out
2007 FY profit analysis
Delivering increased profit in October 2007
No reason for optimism in latest sales figures

Discuss RBD @ Share Investor Forum



c Share Investor 2008

Warren Buffett is number one with a bullet

I have been obsessed with Warren Buffett and Auckland Airport this last week and it appears readers of this blog have been as well. Record numbers have visited.

Welcome to my many new readers and I hope you stay awhile.

In the wake of Buffett's letter being released last Friday, the biggest financial subject googled has been "Warren Buffett's letter to stockholders".


Warren Buffett makes it to the number one spot as the world's
wealthiest man and the most googled financial subject, all in the
same week.


The momentum continues as the Forbes Rich List came out today and news that Buffett hit the top of the list for the first time.

The indication for me about the frenzy over what the Sage of Omaha has to say during the last week is that people are looking to him for reassurance over where the economy and markets may be heading over the short to medium term.

Answer?

I'm not sure even he knows but the uncertainty is certainly taking its toll on investors.

In the wake of all this interest, I have started a new website Everything Warren Buffett, where you can check out his portfolio, look at all his letters, view video and audio and get some great investment tips from the great man.

NZ Herald-The Battle for the Airport

There has also been a great deal of interest from overseas about the Auckland Airport Saga. Brokers and those in the financial industry are watching what is happening closely, and I'm sure, given the recent government interventions, they are not liking what they are reading.

It seems that particular story isn't over yet, with murmurs of legal action against the Labour government.

Related Share Investor reading

Buffett dines out on a good result: So can you
Warren Buffett's 2008 letter to Berkshire Hathaway highly anticipated - Includes Buffett letter in PDF
Warren Buffett 2008 Letter in Blog Format
Global market meltdown: What is Warren Buffett doing?
The Intelligent Investor: Book review

Subscribe to Everything Warren Buffett in a reader

c Share Investor 2008

Electoral Finance Act Protest: Auckland, 9 March, 2.00 pm, 2008

Email sent to Political Animal 4.00pm today

Silent Protest March against the Electoral Finance Act - This Sunday 9 March, meet outside the Auckland Town Hall from 2.00pm.

To my friends, family, business colleagues and supporters

In a democracy one of our most precious rights should be our right to speak out, criticize and campaign against the government – any government.

In passing the Electoral Finance Act parliament severely restricted our freedom to do so. This sets a dangerous precedent. The Human Rights Commissioner spoke out on behalf of all New Zealanders and called on the Government to withdraw the bill and start again. She was ignored.

We now have a law restricting what we can spend campaigning against the government that is less than half of what the Human Rights Commission and the Electoral Commission thought was fair.

What is worse, this new law will apply for over three times longer than the Human Rights Commissioner thought was reasonable.

For many decades New Zealanders have gone to war to protect our precious freedoms. We should not give them up lightly.

You now have a choice, you can simply accept that your freedoms have been restricted or you can stand up and protest and let the parliamentarians know that this is not on.

I am not prepared to sit back and do nothing. I am organising a SILENT protest march against the Electoral Finance Act this Sunday 9 March and I invite you to join me.

I would be very grateful if you could help me promote this march by bringing it to the attention of your family, friends and colleagues. I have attached a copy of the ad that appeared in The New Zealand Herald yesterday.

If we don’t stand up for our rights now we do not know what freedoms we may lose next.

Regards

John Boscawen, Trustee, Freedom of Speech Trust.

Box 42-267, Orakei, Auckland.

john@boscawen.co.nz


Related Political Animal Reading

Historical day as New Zealand loses democratic freedom
Auckland EFB protest lures 5000
Day of protest: Auckland NZ, Nov 2007
Electoral Finance Bill: The Purpose is clear
Cartoon & Comment, Emmerson: Winston Churchill Clark
List of MP's who voted for EFB
Extending middle finger in 2008

Links c Political Animal 2008