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Positive Coke Amatil result unspoiled by food division

Emma Rapaport with AAP  |  22 Aug 2018Text size  Decrease  Increase  |  
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coke CCL cocacola amatil

The beverage bottler posted $158m net profits for fiscal 2018, up 11 per cent on 2017 despite disappointing performance from its food operation.

Narrow-moat Coke bottler Coca-Cola Amatil (ASX: CCL) is considering selling its SPC fruit and vegetable canning business to help grow the company's underperforming food, service and corporate division.

A sale, partnership or merger are among options to be considered, group managing director Alison Watkins revealed at the company's half-year profit results on Wednesday. 

"We believe there are many opportunities for growth in SPC, including new products and markets, further efficiency improvements, and technology and intellectual property," Watkins said in a statement.

"Importantly, there are no plans to close SPC. We see a positive future for SPC as it continues to transform its operations."

Morningstar's regional director of equity research Adam Fleck dismissed the announcement as immaterial, noting SPC makes up a tiny part of Coca-Cola Amatil's earnings.

Food, service and corporate was the group's most disappointing segment, turning over losses of $1.7 million compared with an earlier profit of $11.9 million.

Coca-Cola Amatil posted a 12.8 per cent increase in half-year profit, aided by double-digit earnings growth in alcohol and coffee sales and strong performances in New Zealand and Fiji.

Underlying earnings for the group's Indonesian segment was down 0.2 per cent, something the company attributes to soft market conditions.

The beverage-maker and bottler said it made $158.1 million in statutory net profit, up from $140.1 million a year ago, while trading revenue was little changed from a year earlier, at $2.39 billion.

Overall Fleck said he was pleased with the result: "Australia has historically been a sore spot for Amatil, but reinvestment in flavour innovation, product sizes and marketing has led to only a slight decline in volume (0.3 per cent)."

"Water in particular has been a nice turn around for Coca-Cola Amatil in Australia, and New Zealand continues to hit sixes with terrific innovation and execution."

Challenges however continue to persist for the company in Indonesia, Fleck says – a segment which was expected to be an avenue for future growth. Morningstar is still forecasting Indonesia to climb.

In the medium-term, the company is continuing to target mid-single digit earnings per share growth.

A partially-franked interim dividend of 21 cents was announced, unchanged from a year ago.
Coca-Cola Amatil shares were up 20 cents, or 2.1 per cent, to $9.72, as of Wednesday 10:30am.

Performance highlights

• Net profit up 12.8pc to $158.1 million
• Partially-franked dividend 21 cents, unchanged

 

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Emma Rapaport is a reporter for Morningstar Australia

© 2018 Morningstar, Inc. All rights reserved. Neither Morningstar, its affiliates, nor the content providers guarantee the data or content contained herein to be accurate, complete or timely nor will they have any liability for its use or distribution. This information is to be used for personal, non-commercial purposes only. No reproduction is permitted without the prior written consent of Morningstar. Any general advice or 'class service' have been prepared by Morningstar Australasia Pty Ltd (ABN: 95 090 665 544, AFSL: 240892), or its Authorised Representatives, and/or Morningstar Research Ltd, subsidiaries of Morningstar, Inc, without reference to your objectives, financial situation or needs. Please refer to our Financial Services Guide (FSG) for more information at www.morningstar.com.au/s/fsg.pdf. Our publications, ratings and products should be viewed as an additional investment resource, not as your sole source of information. Past performance does not necessarily indicate a financial product's future performance. To obtain advice tailored to your situation, contact a licensed financial adviser. Some material is copyright and published under licence from ASX Operations Pty Ltd ACN 004 523 782 ("ASXO"). The article is current as at date of publication.

. Emma Rapaport is a reporter for Morningstar Australia.

© 2021 Morningstar, Inc. All rights reserved. Neither Morningstar, its affiliates, nor the content providers guarantee the data or content contained herein to be accurate, complete or timely nor will they have any liability for its use or distribution. This information is to be used for personal, non-commercial purposes only. No reproduction is permitted without the prior written consent of Morningstar. Any general advice or 'regulated financial advice' under New Zealand law has been prepared by Morningstar Australasia Pty Ltd (ABN: 95 090 665 544, AFSL: 240892), or its Authorised Representatives, and/or Morningstar Research Ltd, subsidiaries of Morningstar, Inc, without reference to your objectives, financial situation or needs. For more information, refer to our Financial Services Guide (AU) and Financial Advice Provider Disclosure Statement (NZ). Our publications, ratings and products should be viewed as an additional investment resource, not as your sole source of information. Morningstar’s full research reports are the source of any Morningstar Ratings and are available from Morningstar or your adviser. Past performance does not necessarily indicate a financial product's future performance. To obtain advice tailored to your situation, contact a licensed financial adviser. Some material is copyright and published under licence from ASX Operations Pty Ltd ACN 004 523 782. The article is current as at date of publication.

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