CCL Slightly Exceeds Expectations but Indonesia Still a Worry

Coca Cola Amatil says it did better than expected on the year to December, but will report lower revenues and earnings, thanks to COVID-19.

And with the pandemic still battering Indonesia, its most troubled area of operation, you’d right to be cautious about the performance this year.

In a trading update on Friday the company said  its earnings before interest and tax (and one off items) for the 2020 calendar year would be $550.7 million.

That’s a 13.9% fall on the 2019 year but it was a bit higher than market analysts were expecting, with forecasts at $504.1 million.

Net profit after tax is expected to be $340.3 million, down from $393.9 million (which came in a non-COVID environment here and off shore).

The company said the impact of COVID lockdowns meant 2020 fell and total revenue dropped 6.1% compared to $4.762 billion (from $5.11 billion).

“There has been a notable improvement since the peak of the pandemic with 2H20 revenue finishing down 3.3% compared to the 1H20 decline of 9.2%,” Coca Cola Amatil said in Friday’s update.

Group Managing Director Alison Watkins said, “In light of our continuous disclosure obligations we are today providing the market with a preliminary update on trading performance in the fourth quarter of FY20 (4Q20).

“We delivered a strong trading performance in the all-important 4Q20 Christmas period in both Australia and New Zealand. We experienced strong demand in both markets, predominantly in the Australian Grocery channel, and more broadly across most channels in New Zealand.

“Whilst we are encouraged by recent trading in Australia and particularly in New Zealand, month to month volatility remains. This is particularly the case in Australia, where On-the-Go (OTG) trading can vary considerably by state depending on the prevailing COVID-19 restrictions and related sentiment at any given point in time.

“Our Indonesian business continues to face challenging trading conditions, with COVID-19 infection rates remaining high and tough macro-economic conditions prevailing. Despite the difficult environment, our team has remained focused on servicing customers and tightly managing costs and working capital, to deliver positive EBIT and strong cashflow for the year.”

The full 2020 results to be released next month could be the final one from the company. Coca Cola Amatil is facing being taken over by Coca-Cola European Partners via a proposed Scheme of Arrangement.

But the share price will have to be boosted considerably from the mooted $12.75. The current price is over $13 at $13.04 – it rose 13 cents or 1% in the first few minutes of trading on Friday.

If it continues rising then the bid could be in trouble unless the mooted bidder (with the support of the US parent) wants to come up with a convincing price that will have to be close to $15 a share.


Glenn Dyer

About Glenn Dyer

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.

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