Corporate Governance

2/3rds of Rugby Australia cash would disappear

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Rugby Australia’s (RA) CEO Raelene Castle says that the franchise can weather paying out Izzy Folau’s $10m claim. Although CM is not sure that paying out $10m + costs which would wipe out almost 2/3rds of the $18mn in cash on the balance sheet is something a CEO would think is worth boasting. What she needs to focus on is the declining operating performance.

Hopefully, Chairman Clyne will get his CEO to focus on NZ Rugby (NZR) as a benchmark.

RA took in approximately A$30m in licensing and sponsorship last year. NZR raked in A$65m. More than double for a country with one-fifth the population. Think about it. The advertising base is smaller yet the sponsors must see the returns as superior to do so.

Total revenues for RA sum to around A$110m. NZR takes in A$182m in 2018.

Matchday revenue for RA reached A$20m last year. NZR collected A$28m.

Total assets for RA sum to A$69m. NZR total assets are A$183m. Total equity for RA is A$27m vs NZR at $99m.

Perhaps understanding why the Wallabies franchise saw a 20% fall in revenues in 2018 is a bigger issue. Expenses fell 15% mainly due to slashing Super Rugby team costs in half and player costs by 33%. Without that, the company would have sunk deep in the red.

RA needs to focus on growth not cut itself into oblivion. When it prioritizes its customer base rather than put precious resources into virtue signaling and diversity programs the board wouldn’t need to park 2/3rds of the cash to cover up their catastrophic lack of judgment.

Nonetheless good to know Castle sleeps easy at the thought of losing such magnitudes.

BoM strikes again

BoM

Jo Nova has an interesting piece which describes the shameless behaviour of our Bureau of Meteorology (BoM). She notes,

The Streaky Bay information (site 018079) tells us it opened in 1865 but the site only has monthly data from 1926 and daily data from an even shorter period. The rest presumably hasn’t been digitized yet. As best as I can tell, the station metadata appear to mark this site as being at the post office from 1865 to 2018, and record the ground cover as becoming asphalt in July 1987. That means for 31 years the Australian Bureau of Meteorology knew the site was sitting on hot bitumen and couldn’t be bothered to move it? The BOM gets more than a million dollars a day, and claims there’s a dire crisis running, and they don’t even care enough to measure climate change properly? They’re not even trying.

If you click on the Streaky Bay information site link above you’ll be directed to a “page not found.”

Jo Nova demands a Royal Commission (RC) into the BoM. CM agrees. If they have nothing to hide, there is nothing to fear. People might claim it is a waste of money to host a RC on the BoM but the savings of that investment would far outweigh the billions spent on poorly derived data-driven expenditure on renewables.

Uh Oh! Tesla’s next big problem

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Glencore reported on p33 of its half-yearly results that it is suspending its cobalt mining in the DR Congo. It noted that, “Mutanda’s economic viability has deteriorated since the update provided at the 2018 Results presentation in February 2019

Note that Mutanda provided 25kt of cobalt, a vital ingredient in making batteries for electric vehicles (EV). In Darton Commodities ‘2018-2019 Cobalt Market Review,’ it forecast total global cobalt supply of 140kt in 2020 vs. total global demand of 132kt. Knocking out Mutanda will push the market into 19kt deficit.

For a company like Tesla that is trying to ramp volumes at lower/discounted prices, higher raw input prices will only make life harder in making sustainable profits.

How lucky we are that Bill Shorten never got his 50% EV sales by 2030 plan into effect.

The evil plastic industry?

Sadly a post from a former competitor spoke of how no plastic is ‘guilt free’. CM simply replied “all plastic CM uses is 100% guilt free”. Worse, there was an absurd assertion that the plastic industry was going out of its way to keep polluting the world. Is it?

Basically she’s going to have to give everything up. Her credit cards are plastic. No doubt most of her car interior, toys and utensils for her young child contain a lot of plastic. Same for the toothbrush, iPhone,iPad, laptop, desktop and TV.

The article from The Intercept showed the reality of plastic. When the Chinese stopped recycling the world’s plastic waste in 2017 it only proved how far down the cost curve plastic has become.

Think about it. Plastic is one of the most versatile, practical, strong and flexible materials that can be produced at really low cost. The reason why China doesn’t recycle the world’s waste is that it’s not cost effective. If it was they’d still do it. The Chinese didn’t stop it because they felt pangs of “guilt”.

Speaking of guilt. No sooner had the virtue signaling at Coles & Woolworths supermarkets started, both launched plastic toy series to encourage kids to collect the full set.how many plastic bags in one mini shop or ooshie? While shopping the other day. A kindergarten was doing trip to the super market in hi-vis jackets. The store manager handed all the kids a plastic bag full of goodies. Great PR. Hopefully the teachers won’t confuse the kids while teaching the alphabet that plastic is evil and they must feel guilty.

In 2006 the UK Environment Agency did a study on the effectiveness of alternative packaging solutions to HDPE (conventional plastic bags) in terms of lowering environmental impact. It said,

The paper, LDPE, non-woven PP and cotton bags should be reused at least 3, 4, 11 and 131 times respectively to ensure that they have lower [impact] than conventional HDPE carrier bags that are not reused.”

So if conventional biodegradable plastic shopping bags are used to throw out garbage that means 6, 8, 22 and 262 days.

The plastic industry isn’t fighting to pollute the world. Laziness in its disposal is the problem.

60% of mismanaged plastic waste was from East Asia (i.e. China), 11% from South Asia; 9% from sub-Saharan Africa; 8% from MENA; 7% from LatAm; 3% from Europe and 0.9% from North America. Australia doesn’t even get a mention. Our impact is zero.

If all else fails, Canadian PM Justin Trudeau has the answers on plastic use.

Job opening: Activism & Impact Manager

Activism

This is actually a job. Ben & Jerry’s Ice Cream is hiring an ‘Activism and Impact Manager‘. Lucky for them, its parent Unilever is also a woke corporation. The job spec is simple:

Do you have at least three years’ experience working in campaigning within the NGO, charity or grassroots movement-building space? Have you got a passion for the idea that business can be used to drive positive change in the world? Do issues of social and environmental justice drive you to take action and are you able to persuade others to join you?

Values-led ice cream company Ben & Jerry’s is recruiting an Activism and Impact Manager to lead social and environmental justice campaigns in Australia and New Zealand with our team in Sydney.

CM guesses that milk shaking conservatives is a new thing of the left so there are some definite synergies to be had by “Ben & Jerrying” them. Hopefully, the Chief “Woke” Officer (CWO) can offset any losses to Unilever’s bottom line by encouraging activists to only use social and environmental just milk-based products from Ben & Jerry’s to ensure that the lost business from one side is made up through willful waste on the other.

When will businesses learn that telling their customers how to behave is not required? Yet another business to swipe from the list – Nike, Gillette, Ben & Jerry’s, Colgate, Starbucks…

Parker Hannifin slowing (still) in 4Q

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Parker Hannifin (PH), the world’s industrial giant hardware store reported the following orders for the quarter ending June 30, 2019, compared with the same quarter a year ago:

  • Orders decreased 3% for total Parker (-4% in 3Q)
  • Orders decreased 4% in the Diversified Industrial North America businesses (-6% in 3Q)
  • Orders decreased 8% in the Diversified Industrial International businesses (-4% in 3Q)
  • Orders increased 10% in the Aerospace Systems Segment on a rolling 12-month average basis (+2% in 3Q)

PH is such a good read across on global activity. It supplies the likes of Caterpillar, Boeing, Cummins, Freightliner etc etc. in seals, pumps, hoses, connectors, filters, actuators etc etc. it supplies food companies with linear systems and pharmaceuticals with clean systems/pumps.

No wonder US Fed Governor Jerome Powell just cut rates. The world’s industrial powerhouses aren’t expanding and PH’s order book reflects the underlying weakness. No wonder Trump tweeted that Powell should make more cuts.

For the FY2020 outlook, PH is forecasting flat to down 3%. North American industrial flat to -2.8%, International Industrial -3.2% to -6.2% and Aerospace holding things up at +3.0% to +5.6%.

Typical US management bluster in the conference call. What else is new?

PG slices another $8bn off Gillette in 4Q

P&G reported stronger earnings overnight but wrote off another $8bn in 4Q on top of the $6bn in 3Q on the Gillette brand in terms of goodwill and intangibles. Of course management brushed this off as significant devaluations over a decade, lower shaving frequency and new entrants at prices lower than the average. Nothing to do with the toxic masculinity campaign 6 months ago? Get real.

Under grooming, most of the results performance came through the sale of real estate in Boston. Other than that the company reported unfavorable channel mix, volume declines, brand communication investments and currency headwinds. The CFO Jon Moeller said with respect to Gillette,

You’ve got here a business with a very broad global footprint, and particularly with the year that we have just been through, that impacts that value assessment,”

Sorry, what does that even mean? No surprises that grooming was the worst performing division in P&G’s quiver.

Get woke, go broke.