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Coca-Cola Amatil posts 7.8pc rise in 1H profit

Nicholas Grove  |  26 Aug 2016Text size  Decrease  Increase  |  

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The Coke bottler records a 7.8 per cent lift in half-year earnings after a strong performance in its growth markets counteracts changing Australian consumer tastes.


Coca-Cola Amatil's (ASX: CCL) net profit for the six months ended 30 June 2016 rose 7.8 per cent on the same period in the prior year to $198.2 million, after a strong performance in the company's growth markets offset a decline in the Australian beverages business.

Earnings per share (EPS) also rose 7.8 per cent on the same period in the prior year to 26 cents a share, the Coke bottler said in a statement to the ASX on Friday.

The EPS result was towards the company's target of "sustainable mid-single-digit EPS growth in the medium term".

Net operating cash flows increased from $161.2 million as of 3 July 2015 to $331.7 million, with cash realisation of 98.1 per cent.

Coke Amatil declared a half-year dividend of 21 cents a share, franked to 75 per cent, which represents an increase of 5 per cent and results in a payout ratio of 80.8 per cent for the first half.

Group earnings before interest and tax (EBIT) rose 3.2 per cent year over year to $326.9 million, the company said.

The company's businesses in Indonesia and Papua New Guinea recorded EBIT growth of 65.2 per cent, the Alcohol & Coffee segment grew earnings by 33.6 per cent, while New Zealand and Fijian operations saw EBIT rise 5.4 per cent.

In contrast, the Australian beverages business recorded a 1.9 per cent fall in EBIT as the division continues to focus on "rebalancing the portfolio to reflect consumer demands and trends".

Overall, managing director Alison Watkins described the company's performance as "solid," and said the Australian business is moving to meet consumer demands with a greater focus on portion size and product reformulations.

"We are also continuing with a strong cost-management program, improved route-to-market performance and a reinvestment of cost savings into price and brand," she said.

While not providing any earnings guidance, Watkins said the Coke Amatil's 2014 strategic review continues to set the direction for the company.

"We know that conditions, particularly in Australia, will continue to be challenging and that our task will be to continue the performance of our growth businesses in the second half, demonstrating that our growth is real and sustainable," she said.

"We know that our markets will continue to challenge us. However, the plans we put in place two years ago are starting to deliver the outcomes we anticipated.

"We have taken another step forward in this half and we intend to build on this."

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Nicholas Grove is a Morningstar journalist.

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