Coca-Cola Amatil warns of 15% drop, or AU$56M decline, in its H1 earnings from AU$373.9M in year-ago period
April 13, 2014
(Gold Coast Bulletin)
– COCA-Cola Amatil has suffered its biggest single-day market rout in two decades after warning of a $56 million hit to first-half earnings.
Investors sent the group’s shares plummeting 14.6 per cent yesterday – the heaviest drop for any trading session since the early 1990s.
They closed at a four-year low of $9.74.
It came as the company announced it would launch a strategic review on the back of weak performances in Australia and Indonesia.
Coca-Cola Amatil expects earnings before interest, tax and “one-offs” for the six months to June will tumble 15 per cent, from $373.9 million in the same period last year.
The only bright spot was the wave of public support for the group’s troubled Victorian fruit processing business SPC Ardmona.
Sales in the division surged 10 per cent in the three months to March. Coca-Cola Amatil managing director Alison Watkins, who took up the role six weeks ago, said heavy discounting from giants Coles and Woolworths made it difficult for the group to offset rising costs.
“The grocery channel continues to be challenging with aggressive pricing activity, which has limited Coca-Cola Amatil’s ability to recover cost increases,” Ms Watkins said.
She said the company also needed to better capitalise on growing areas of the market, such as bottled water.
Ms Watkins said the group’s Indonesian business expected volume growth of more than 10 per cent this year, but faced significant cost increases driven by unfavourable exchange rates, rising wages and fuel prices.
“We remain excited by longer-term opportunities for Indonesia, but it’s a developing market and we will undoubtedly go through periods of volatility,” she said.
Closer to home, she said SPC Ardmona was moving fast to leverage the surge in support from consumers and retailers with plans to launch new products.
“You can see the wonderful passion that SPC as a brand ignites in many of us,” she said.“The sales growth has been in no small part thanks to the great support we have seen right across Australia.”