Alison Watkins puts stamp on CCA leadership

Mitchell Bingemann
JANUARY 15, 2015
THE AUSTRALIAN
COCA-Cola Amatil boss Alison Watkins has completed her purge of Terry Davis-era lieutenants as she continues her quest to cut $100 million from the business and underpin a rebound in sales and earnings.
The purge — the second major management reshuffle instigated by Ms Watkins — claimed the scalps of two long-serving senior Amatil executives, finance chief Nessa O’Sullivan and SPC Ardmona boss Peter Kelly.
The loss of the pair, who together worked at the company for more than 35 years, follows last year’s departure of Australian managing director Warwick White and brewery chief John Murphy.
The departures mean Ms Watkins, who last year replaced long-time Coca-Cola Amatil chief Terry Davis, has removed all the top brass from a regime that in recent years has been marred by falling sales and an absence of new products.
Both Ms Watkins and CCA chairman David Gonski paid tribute to the departing executives, thanking Ms O’Sullivan for her strong leadership and Mr Kelly for his efforts in turning around the SPC business.
“The CCA board has highly valued both Ms O’Sullivan and Mr Kelly for their professionalism, integrity and commitment to the success of the company. On behalf of the board, I thank them and wish them well for the future,” Mr Gonski said.
Under the management changes yesterday, Ms O’Sullivan will leave her role next month but will stay on at CCA in a consultative role until the end of May to help bring her successor up to speed. Mr Kelly will leave his role at the end of March.
Replacements have yet to be found for veteran SPC Ardmona managing director Mr Kelly, who led the fight to save the fruit subsidiary, or Ms O’Sullivan, who was appointed chief financial officer in 2010 following six years in various senior finance roles at CCA.
It is likely that corporate head hunters Egon Zehnder will lead an internal and external search for replacements.
Securing the talent to replace Ms O’Sullivan and Mr Kelly will be vital in making Ms Watkins’s recovery plans for the fizzy-drink maker a success.
While some analysts have voiced concern that the loss of so much combined beverage industry experience could increase risk at the company, others have interpreted the changes as a clear sign that Ms Watkins is getting on with her job of reversing the company’s recent string of sluggish sales and profit declines.
Those plans have already seen her implement a strategic review, the launch of new products, an intention to cut 300 hundred jobs and the splitting of its Australian non-alcoholic and alcoholic beverages businesses.
She has also scored impressive runs on the board since taking the reins at CC Amatil in March last year, including an agreement to hand over a third of its Indonesian arm to the US Coca Cola bottling giant in return for more than $600 million in fresh funding to accelerate its growth.
But there still remains some pain ahead. The company’s underlying earnings were expected to fall as much as 24 per cent in calendar 2014 while its share price dropped 23 per cent last year.
Investment bank Bank of America Merrill Lynch is expecting that drop to be worse with forecasts that earnings per share for the 2014 year could fall 30 per cent with a net profit of $354m.
The management revamp announcement did little to quell investor concern as the shares fell 1.72 per cent to $9.14 against a broader market decline of 0.95 per cent.
However, the company has forecast that underlying earnings will return to growth in 2015, for the first time in two years.