Coca-Cola Amatil Net Profit up 45% on Lower Interest Bill
17 February 2016 - 10:40AM
Dow Jones News
By Rebecca Thurlow
SYDNEY--Coca-Cola Co.'s (KO) Australian distributor grew its
annual profit by 45% as it cut costs and benefited from a lower
interest bill after the U.S. beverage giant injected US$500 million
into its Indonesian operations, allowing it to reduce debt.
Coca-Cola Amatil Ltd. (CCL.AU), 29%-owned by the Atlanta-based
firm, on Wednesday reported a net profit of 393.4 million
Australian dollars (US$279.6 million) for the year through
December, compared to A$272.1 million a year earlier.
The Sydney-based company produces and distributes the flagship
Coke brand in Australia and four neighboring countries where it
goes head-to-head with PepsiCo. Inc. (PEP) in the cola drinks
market. It also distributes the premium spirits portfolio of Beam
Global Spirits & Wines such as Canadian Club whiskey.
Coca-Cola Amatil said it remains confident it will achieve its
target, first set in 2014, of returning to mid single-digit
earnings per share growth over the next few years.
After years of grappling with flat soda sales in its core
Australian market, Coca-Cola Amatil has been seeking to expand its
footprint in places such as Indonesia and Papua New Guinea to
bolster future profits.
Coca-Cola Co. bought a 29.4% stake in Coca-Cola Amatil's
Indonesian bottling operations in April. The companies are aiming
to boost sales in the world's fourth-most-populous nation,
expanding warehouses and adding coolers at retail outlets. However
the pace of the investment rollout has been curtailed in the face
of a severe slowdown in economic growth in Indonesia.
Coca-Cola Amatil's earnings before interest and tax grew by 1.4%
in the full-year period, as soft drink sales remain tough in
Australia--its biggest market--as consumers focus on the health
issues associated with sugary drinks. Coca-Cola Amatil has been
trying to attract new customers by offering different portion sizes
and reduced-calorie drinks. Australian beverages Ebit rose just
0.2% to A$463.8 million.
Consumers also remain concerned about the health effects of
artificial sweeteners, a factor that drove the launch of Coke Life,
a naturally sweetened mid-calorie carbonated soft drink.
Market analysis cited by Macquarie ahead of the result suggests
the product launch didn't boost Coca-Cola Amatil's soft drink
sales, and may have cannibalised sales of existing colas. The
broker said the company has been losing market share in cola to
competitor Schweppes, which recently stepped up promotions of Pepsi
in supermarkets, as well as private label products. Macquarie
expects Coca-Cola Amatil to respond to falling volumes with
increased promotions and discounting, putting pressure on
margins.
The company said it will pay a final dividend of 23.5 Australian
cents a share, up from 22 Australian cents a year ago.
- Write to Rebecca Thurlow at rebecca.thurlow@wsj.com
(END) Dow Jones Newswires
February 16, 2016 18:25 ET (23:25 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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