Coca-Cola Amatil issues earnings warning

AAP
May 07, 2013

BEVERAGE company Coca-Cola Amatil (CCA) says its earnings have been hit by heavy discounting on soft drinks.
The company’s managing director has also called for more support for Australian fruit producers competing against imported canned fruit.

Lower earnings in the company’s Australian business will cause a drop of eight to nine per cent in Coca-Cola Amatil’s overall earnings in the first six months of calendar 2013, Terry Davis told shareholders at an annual general meeting in Sydney today.

Discounting by competitors had forced the company to reduce its prices, and retailers were also reducing their levels of stock, he said.

“We are not immune to the fallout that has occurred in consumer sentiment which has flowed through to reduced consumer spending, with many food and beverage categories – including our own – experiencing flat or declining volumes so far this year,” he told shareholders.

Coca-Cola Amatil sells a range of non-alcoholic drinks, including Coke, Sprite and Kirks, Mother energy drink and Mount Franklin bottled water.

Mr Davis said earnings were expected to improve in the second half of 2013, which should take full year earnings before significant items to a figure similar to the $896 million it made in 2012.

Coca-Cola Amatil also owns the SPC Ardmona packaged fruit business, which has been under severe financial pressure due to competition from imported goods by labels owned by supermarket chains.

SPC Ardmona’s brands include Ardmona, Goulburn Valley, IXL and SPC.

Mr Davis said support was being sought from federal government, and consumers would also need to act if local manufacturers were to survive.

“My personal view is that, ultimately, Australian consumers will need to vocally encourage the major Australian retailers to lift their support for domestically-grown and produced brands instead of supporting imported private label products, or consumers will face the very real proposition of seeing less and less Australian-grown produce on retailer shelves,” he said.