Latest / What the Flux / KFC has a chicken problem | Amazon overcharged 1 million Aussies according to ACCC| Ticketek's backstage bloodbath plus a special guest

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KFC has a chicken problem | Amazon overcharged 1 million Aussies according to ACCC| Ticketek's backstage bloodbath plus a special guest · What the Flux

• 0:05
  Speaker 1: This is what the Flux.
• 0:06
  Speaker 2: I'm justin and I'm Larissa, and it's Wednesday, the first
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  Speaker 2: of July.
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  Speaker 1: Happy new financial and Larissa's new financially Will you celebrate I.
• 0:13
  Speaker 2: Went to bed very early and watch Netflins.
• 0:16
  Speaker 1: Take it away for us.
• 0:17
  Speaker 2: Well, if you're filling up your petrol tank this morning,
• 0:20
  Speaker 2: you'll probably notice the price stinging a little more than usual.
• 0:23
  Speaker 2: That's because the fuel excised tax cut that had been
• 0:26
  Speaker 2: in place because of the war in Iran has been
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  Speaker 2: halved overnight from thirty two since to sixteen since per liter. Yeah,
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  Speaker 2: the government isn't adding a new tax, it's just taking
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  Speaker 2: away part of the discount.
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  Speaker 1: Really really hurts. Fluxam New month means new academy in
• 0:40
  Speaker 1: the Flux app this month, we're very excited if you're
• 0:42
  Speaker 1: launching what even is an et? So if you're looking
• 0:44
  Speaker 1: to start investing but have no idea what to do,
• 0:46
  Speaker 1: we have got you. Make sure to download the Flex
• 0:48
  Speaker 1: app and check out the academy. This month, We've got
• 0:50
  Speaker 1: three finger licking stories today. Let's do it for our first.
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  Speaker 1: The company behind KFC stores in Australia has posted record
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  Speaker 1: sales for the last fiscal year, but the Folk is
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  Speaker 1: unpreventing bird flu from hitting their supply chain.
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  Speaker 2: No cause for celebration yet for Colin's Food. What's going
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  Speaker 2: on here?
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  Speaker 1: Okay? So Colin's Food is Australia's largest KFC operator.
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  Speaker 2: Yeah, it's A six listed and runs over two hundred
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  Speaker 2: and ninety five stores locally and eighty across Germany and Netherlands.
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  Speaker 1: And there are some. Until recently, it also held the
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  Speaker 1: license to Taco Bell stores in Australia too, which were
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  Speaker 1: bleeding cash.
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  Speaker 2: Yeap, and the Colin's Food crew were celebrating a record
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  Speaker 2: group sales for the fiscal year of twenty twenty six.
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  Speaker 1: Yeah, their sales for the year were up nearly nine
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  Speaker 1: percent to close to one point six billion dollars.
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  Speaker 2: But it was their net profit that got Vista's licking
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  Speaker 2: their chickensisted fingers, with knit profits soaring nearly two hundred
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  Speaker 2: and eighty one percent to forty seven million.
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  Speaker 1: And what will the big drivers of this grow?
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  Speaker 2: It was the liquid Gold sauce apparently, plus the Zinger
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  Speaker 2: barn Me and Zinger nachos.
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  Speaker 1: Larisa, Colin's Food isn't quite celebrating yet.
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  Speaker 2: And why is that?
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  Speaker 1: Because bird flu has arrived on Australian shores, and Colin's
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  Speaker 1: Food is watching it very closely.
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  Speaker 2: Yeah, given its hit Europe already, they know what could
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  Speaker 2: happen if their chicken is also hit.
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  Speaker 1: So what is the key learning here?
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  Speaker 2: Often the biggest players in an industry are still at
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  Speaker 2: the mercy of forces way outside their control.
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  Speaker 1: For a company like Colin's Food, chicken is pretty much
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  Speaker 1: the entire business.
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  Speaker 2: So when the supply chain gets sick, so does the
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  Speaker 2: bottom line.
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  Speaker 1: You see, there is the problem is when bird flu
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  Speaker 1: reaches poultry flocks, governments often order mass culls to stop
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  Speaker 1: the spread.
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  Speaker 2: According to the USDA, the twenty twenty two to twenty
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  Speaker 2: twenty four US bird flu outbreak led to the culling
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  Speaker 2: of over ninety million birds.
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  Speaker 1: Oh and there's let's supply for this same demand in
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  Speaker 1: these higher prices for anyone buying chicken in bulk.
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  Speaker 2: Like say the world's largest fried chicken chains.
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  Speaker 1: And we've already seen bird flu hit the profit margins
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  Speaker 1: of Colin's Foods in its European stores.
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  Speaker 2: Yeah, Colin's Foods confirmed bird flu already cut up to
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  Speaker 2: one hundred basis points from its profit margins. But it
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  Speaker 2: just goes to show that even with record profits in
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  Speaker 2: the bank, the biggest risk is often something you can't
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  Speaker 2: see coming flock am.
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  Speaker 1: Today we're joined by Andrew Knobi, Director of Australia Fixed
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  Speaker 1: Income at Franklin Templeton, a man who'll spent over two
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  Speaker 1: decades thinking about bonds, so you don't have to. Today
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  Speaker 1: we're going to dive into fixed income. What it is,
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  Speaker 1: white matters and why right now might actually be the
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  Speaker 1: most interesting time in years to pay attention to it. Andrew,
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  Speaker 1: Welcome to What the Flux. Thanks for having me, guys, Andrew.
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  Speaker 1: Most of our listeners probably own shares but have never
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  Speaker 1: knowingly actually owned a bond. So in plain terms, can
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  Speaker 1: you explain what a bond actually is and wider governments
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  Speaker 1: and companies use them? Yeah?
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  Speaker 3: Yeah, sure, So, I mean basically, own's encompass a very
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  Speaker 3: broad range of instruments, but when you break it down,
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  Speaker 3: it's effectively alone. So it's a contract between two parties.
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  Speaker 3: Want to lender, want to borrow with an interest rate,
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  Speaker 3: typically a maturity of some form, and basically companies, governments,
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  Speaker 3: other issuers if you like, we'll basically use a bond.
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  Speaker 3: Market has raised a lot of money.
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  Speaker 4: Now we've been through one of the most aggressive rate
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  Speaker 4: hiking periods in a very long time. So, Andrew, can
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  Speaker 4: you explain the relationship between interest rates and bond prices.
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  Speaker 3: Yeah, this is often something that's not as well understood
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  Speaker 3: because bonds are also known as fixed income, and so
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  Speaker 3: when bond prices move around, people say, hang on, why
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  Speaker 3: is it no longer fixed? But the fixed typically relates
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  Speaker 3: to the coupon or the interest rate that's agreed between
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  Speaker 3: the parties. So, for example, Brett and Justin former company,
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  Speaker 3: they want to raise money for ten years. I'm a lender,
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  Speaker 3: and I say, well, I'll give you that money at
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  Speaker 3: a four percent interest rate or coupon. You agree to
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  Speaker 3: pay four percent to me each year for the next
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  Speaker 3: ten years, and then ten years you give me my
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  Speaker 3: one hundred dollars back. Fast forward three months. The market
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  Speaker 3: has decided that the interest rate to lend to Justin
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  Speaker 3: and Brett for ten years is actually four and a
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  Speaker 3: half percent, and I want to sell that security in
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  Speaker 3: the market. Well, hang on, something has to give. The
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  Speaker 3: coupon or the interest rate is fixed at for but
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  Speaker 3: the market is only willing to lend it four and
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  Speaker 3: a half. So prices will adjust to quilibrate that transaction
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  Speaker 3: such that the return will be four and a half percent.
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  Speaker 4: That's a great example. It's in taking on a ten
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  Speaker 4: year bond for our podcast, Here we go.
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  Speaker 1: Four percent sounds pretty good. Actually, you notice how I
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  Speaker 1: quickly moved it high and Andrew May. The last couple
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  Speaker 1: of years, markets have been pretty much all over the place.
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  Speaker 1: We've had tariffs last year, rate uncertainty wars. So when
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  Speaker 1: equities are volatile, what is fixed income typically doing for
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  Speaker 1: a portfolio and does it hold up in a way
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  Speaker 1: to reduce risk as a bit of a safe haven.
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  Speaker 1: How does it work?
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  Speaker 3: Yeah, Look, historically, and I'm talking over many, many decades
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  Speaker 3: of investing, conventional wisdom would have said, do you have
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  Speaker 3: a diversified or balanced portfolio. You need to have some
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  Speaker 3: equities or some growth assets, and you need to have
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  Speaker 3: some defensive assets, which historically would have been sovereign or
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  Speaker 3: government bonds or defensive low response and so you had
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  Speaker 3: seventy percent in equities thirty percent in bonds. That would
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  Speaker 3: be a very traditional balanced portfolio. We have argued, and
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  Speaker 3: I think we are observing and have observed over now
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  Speaker 3: many years, that that relationship doesn't work too well. When
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  Speaker 3: you want it to. So if you think about March
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  Speaker 3: this year, we had a conflict in the Middle East,
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  Speaker 3: all of a sudden, equity prices came under pressure. On
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  Speaker 3: prices came under pressure. Hang on, my portfolio isn't as
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  Speaker 3: diversified as I thought it was. You know, go back
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  Speaker 3: to twenty twenty one, similar sort of circumstances. I can
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  Speaker 3: show you any number of examples over the last ten
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  Speaker 3: years where this relationship, this idea of hey, prices will
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  Speaker 3: go up when equity prices are falling and therefore offset
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  Speaker 3: the other is actually not working so well. So you know,
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  Speaker 3: you need to rethink the way defensives and bonds are structured,
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  Speaker 3: if you like, or approach to make sure you do
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  Speaker 3: have that sort of defensive characteristic.
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  Speaker 4: So, how do you actually access fixed income investments if
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  Speaker 4: you're not a sophisticated investor.
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  Speaker 3: Yeah, so I think this is where you know. I'm
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  Speaker 3: a fund manager. So I'm not going to shy away
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  Speaker 3: from the fact that I think part of the role
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  Speaker 3: of fund managers in its asset class is to solve
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  Speaker 3: a problem that exists or individual investors, and that problem
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  Speaker 3: is how to actually build a portfolio that's well diversified
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  Speaker 3: and gives the investor access to something that they can't
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  Speaker 3: access directly themselves. And to be honest, if you could
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  Speaker 3: access directly that yourself by buying a whole bunch of
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  Speaker 3: individual securities, then go for it. But you can't do that.
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  Speaker 3: So most fixed income instruments in the Australian market, and
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  Speaker 3: certainly the ones we look at globally, you just can't
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  Speaker 3: buy in an exchange, so you need to have an
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  Speaker 3: intermediary to solve that problem for you. That can be
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  Speaker 3: through a managed fund, it can be through an ETF
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  Speaker 3: which is an exchange traded version of that fund, so
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  Speaker 3: still something listed and so there's a number of different
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  Speaker 3: avenues you can take and you know, I think that
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  Speaker 3: gives you. It gives you good choice in terms of,
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  Speaker 3: you know, solving for how you get access to the market.
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  Speaker 1: Andrew, thanks so much for joining us on What the
• 7:25
  Speaker 1: Flux Today. Looking forward to you coming back next time.
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  Speaker 3: Yeah, thanks guys awesome.
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  Speaker 1: For our second story. Amazon Australia is being sued by
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  Speaker 1: the ah Trible c for allegedly sneaking ads onto its
• 7:36
  Speaker 1: streaming platform and then charging customers to remove them as well.
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  Speaker 2: You were busy binging off campus. Amazon was busy, really
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  Speaker 2: love tell me more?
• 7:44
  Speaker 1: Okay, so we know Amazon the tech drive.
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  Speaker 2: Amazon was founded by Jiff Bezos in nineteen ninety four
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  Speaker 2: and has grown into a music platform, cloud computing company,
• 7:52
  Speaker 2: and streaming surface Amazon Prime.
• 7:55
  Speaker 1: Amazon Prime Australia has around five million subscribers and he's
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  Speaker 1: one of the most used streaming platform in the country,
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  Speaker 1: second to just Netflix.
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  Speaker 2: But now Amazon's being sued by the A Triple C
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  Speaker 2: for allegedly charging one million of those annual Prime subscribers
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  Speaker 2: a sneaky fee just to remove ads.
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  Speaker 1: The A triable Ce reckons Amazon used unfair contract terms
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  Speaker 1: to sneak in extra charges for existing customers mid contract
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  Speaker 1: go on. Okay, Between November twenty twenty three and August
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  Speaker 1: twenty twenty five, Amazon introduced ads to Prime Video and
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  Speaker 1: then charge two ninety nine a month to customers wanting
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  Speaker 1: to remove them.
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  Speaker 2: So suddenly you're sitting through two minutes of ads at
• 8:29
  Speaker 2: peak of off campus drama.
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  Speaker 1: Yeah. So now the ariple Ce is taking Amazon to
• 8:33
  Speaker 1: court after getting a bunch of complaints from customers who
• 8:35
  Speaker 1: said they had absolutely no choice but debate more after
• 8:38
  Speaker 1: already paying almost eighty bucks up front for their prime subscription.
• 8:41
  Speaker 2: But just because it was in the contract doesn't mean
• 8:43
  Speaker 2: it'll hold.
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  Speaker 1: Up in court. So what's the key learning here?
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  Speaker 2: Businesses can write a contract, but they don't write the rules.
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  Speaker 1: Yeah, there are rules stop companies from ripping off their
• 8:51
  Speaker 1: customers in the contracts.
• 8:53
  Speaker 2: Break those rules and the a triple C will be
• 8:55
  Speaker 2: on your case for unfair contract terms.
• 8:57
  Speaker 1: For example, if you've signed up to a gym membership
• 8:59
  Speaker 1: with fit as classes but the classes get taken away
• 9:01
  Speaker 1: but you've already paid a full year, that could be
• 9:04
  Speaker 1: considered an unfair contractep.
• 9:05
  Speaker 2: And rules around unfair contract terms in Australia were actually
• 9:09
  Speaker 2: tightened in twenty twenty three to help protect consumers from
• 9:12
  Speaker 2: this power and balance.
• 9:13
  Speaker 1: Which means contracts now face more scrutiny than ever from
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  Speaker 1: the ATRIA will see.
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  Speaker 2: For example, PayPal Australia got dragged to court in twenty
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  Speaker 2: twenty four over a clause they buried in small business contracts.
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  Speaker 1: So Amazon could face a similar ruling because the fine
• 9:26
  Speaker 1: print isn't always enough to cover a business in court.
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  Speaker 2: For our third and final story, the owner of Ticketik
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  Speaker 2: has started a major restructure and job cut after it
• 9:36
  Speaker 2: scrambles to win back the events it's been losing left,
• 9:38
  Speaker 2: right and center.
• 9:39
  Speaker 1: TG's new bosses barely a month into the job. He's
• 9:41
  Speaker 1: already swinging the acts, so tell me more. So.
• 9:44
  Speaker 2: TEG owns Tickeertic Australia's biggest ticketing platform.
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  Speaker 1: And there's that. You may remember that private equity giant
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  Speaker 1: Silverlake bought TG back in twenty twenty for one point
• 9:52
  Speaker 1: eight billion dollars.
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  Speaker 2: But the last six months have not been pretty for ticketick.
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  Speaker 1: No, No No. In October last year, TICTEK lost the
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  Speaker 1: venues U South Wales deal, which was worth one hundred
• 10:01
  Speaker 1: million dollars over seven years.
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  Speaker 2: That covered the ISCG Aliam Stadium, a core stadium, all
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  Speaker 2: gone to rival ticket Master.
• 10:08
  Speaker 1: Then in April they lost Melbourne Park two that's Rod
• 10:11
  Speaker 1: Labor Arena, Amy Park the lot to a us ferm Axs.
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  Speaker 2: And to make matters worse, TEG lost one hundred and
• 10:17
  Speaker 2: sixty million last financial year.
• 10:19
  Speaker 1: So now with a new CEO, TG's announced a major restructure,
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  Speaker 1: cutting over five percent of their staff.
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  Speaker 2: And it's got people whispering that silver Lake might be
• 10:27
  Speaker 2: looking for an exit or a rescue.
• 10:29
  Speaker 1: Because losing these big contracts are really weighing down the business.
• 10:32
  Speaker 2: So what's the key learning here.
• 10:34
  Speaker 1: Losing a contract doesn't just cost you the revenue from
• 10:36
  Speaker 1: that contract, it costs you years of momentum you'll never
• 10:39
  Speaker 1: get back.
• 10:40
  Speaker 2: Ticketing deals aren't like subscription you can win back the
• 10:42
  Speaker 2: next quarter.
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  Speaker 1: Now they're locked in for years.
• 10:45
  Speaker 2: For example, judds the venues New South Wales deal alone
• 10:48
  Speaker 2: runs for seven years.
• 10:49
  Speaker 1: So that is seven years of bookings, of fees, of
• 10:52
  Speaker 1: data the ticket TEK just handed to its competitor.
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  Speaker 2: It's why TG's owners are under so much pressure.
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  Speaker 1: Yeah, private equity like silver Lake typically by companies so
• 11:00
  Speaker 1: it can fix them up and sell them in five
• 11:02
  Speaker 1: to seven years. Maths.
• 11:03
  Speaker 2: That's exactly what they tried to do in twenty twenty three,
• 11:06
  Speaker 2: shopping teg around for two point five billion.
• 11:09
  Speaker 1: With no style going through that time, and now two
• 11:11
  Speaker 1: major contracts gone, TG's value has likely dropped, not risen
• 11:16
  Speaker 1: flox Am. From next week, we're shaking things up a
• 11:18
  Speaker 1: little for the next two months. Brett, Larissa and I
• 11:20
  Speaker 1: will be dropping two episodes a week Wednesdays and Fridays,
• 11:23
  Speaker 1: and instead of our usual news rundowns, we're going deep
• 11:25
  Speaker 1: think full industry deep dies and sit down in interviews
• 11:28
  Speaker 1: with some seriously impressive Australian business leaders, and do worry,
• 11:31
  Speaker 1: We'll still be kicking off each episode with your business
• 11:33
  Speaker 1: use Fix so you won't miss a beat. It's basically
• 11:36
  Speaker 1: the good stuff, with even more of it. We cannot
• 11:38
  Speaker 1: wait to share it with you, so stay tuned
• 11:40
  Speaker 2: Thanks for listening, and we'll see you on Friday