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REPORTING SEASON: Coca-Cola Amatil (CCL)

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Figure 1: Coca-Cola Amatil 12 month chart

 

Beverage and packaged food company, Coca-Cola Amatil Limited (CCL) issued a worse than expected full year underlying profit of $502.8m.

The result was partly held back by difficult trading conditions in the Australian grocery channel and a hefty $404m write-down of its SPC Ardmona assets.

The write-down was the principal reason for the 82.5% slump in earnings. CCL blamed ‘a perfect storm created by external economic factors’ for SPC’s underperformance.

Last week, CCL and the Victorian government controversially decided to provide a combined $100m over three years ($78m from CCL and $22 from the Vic govt) to help improve SPC’s efficiency and innovation.

CCL earned 35.6% of its trading revenue from its three top customers (Metcash, Wesfarmers & Woolworths).

Pricing pressures from these retailers together with aggressive competition hurt margins.

A firmer dollar has made it difficult for CCL to compete with its exports while enabling cheap imported products to be sold locally.

A 75% franked final dividend of $0.32 per share will be paid to eligible shareholders on 1st April.

CCL shares slumped following the result. Looking ahead, CCL said it remains ‘concerned by the generally weaker consumer confidence and spending environment’.

A trading update will be provided at its AGM in May.

 

You can see all of CommSec’s reporting season analysis by clicking here.

Steven Daghlian, Market Analyst,