Coca-Cola Amatil Bottles Better Half
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Are things picking up for Coca-Cola Amatil? Looking at the figures it was more of the same, a weak Australian performance, solid contributions from other businesses, and not much in the way of an upturn locally.
While there were hints of an improvement in its key Australian soft drinks and water business in its 2017 financial results, released yesterday, earnings and sales were lower and it was strong full-year contributions from its offshore markets that helped bottom line.
A sharp, $344 million rise in net debt to $1.3 billion should be a worry for analysts and investors
Those other businesses - NZ, Fiji, Indonesian, Papua New Guinea as well as its Australian alcohol and coffee divisions - all reported higher earnings before interest and tax, including a 30.6% jump in Indonesia and PNG to $90.9 million.
The Statutory profit was boosted by $29 million from the sale and leaseback of CCA’s Richlands plant in Queensland.
Otherwise Coca-Cola said underlying net profit of $416.2 million was broadly in line with guidance.
Net profit for Coca-Cola Amatil jumped 81% to $445.2 million for the year to December 31, thanks to one-off gains that help obscure another weak year for sales - down 2.8% at $4.9 billion.
The group’s Australian beverages division, its core business, had another challenging year with underlying earnings before interest and tax (EBIT) falling 6.4% to $412.6 million.
CEO Alison Watkins said despite the overall weak performance from Australian beverages, there was an improvement in revenue, volume and earnings in the second half as investments in lower prices slowed declining sales.
Chief financial officer Martyn Roberts said the group has increased their share of Australia’s water drinks market but the sparkling segment, which covers soft drinks and the core Coca-Cola brand, had little growth in market share.
“The most pleasing number is the positive volume growth in still beverages and that largely came from a return in (sales) volumes in water which we invested in price after Easter," he told investors on Wednesday.
“That was a big change for us in terms of market share."
Ms Watkins said the $40 million investment in lower prices in the Australian business, announced in November, will weigh on earnings in the short-term and also flagged an impact from the recently introduced NSW container deposit scheme.
The scheme allows consumers to return cans and bottles for a 10 cent refund but added to drinks manufacturers’ costs.
“What we saw was quite significant and disappointing delays to the roll out of collection points in NSW which meant that consumers were not able to easily redeem from December 1 if they wanted to redeem from a collection point," Ms Watkins said.
She said the company continued to target mid-single digit earnings per share growth in the coming year.
The dividend rose to 26 cents a share for the year, up from 25 cents.
Coca-Cola Amatil shares gained 1.6% to $8.83 on Wednesday, their highest level since mid-July.
Glenn Dyer has been a finance journalist and TV producer for more than 40 years. He has worked at Maxwell Newton Publications, Queensland Newspapers, AAP, The Australian Financial Review, The Nine Network and Crikey.
At the AFR he was a finance writer, Finance Editor, News Editor and Chief of Staff. At the Nine Network he was supervising producer of Business Sunday for more than 16 years. He has also written for other online and analogue print publications here and overseas.