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REPORTING SEASON: Coca Cola Amatil Ltd (CCL)

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Figure 1: Coca Cola Amatil Ltd 12 month chart

 

Coca-Cola Amatil (CCL) result has investors feeling flat

·         Beverage company Coca-Cola Amatil (CCL) released a largely expected 19% slump in underlying profit to $182.3m. Sluggish performances across its Australian and Indonesian markets were a drag

·         Despite the poor result, the slump in earnings was previously flagged by the company behind drinks like Fanta, Sprite, Powerade and Mount Franklin. CCL warned investors of the likely ~15% fall in 1H14 EBIT and its immediate challenges in the Australian market at its 11 April update. The news had pushed its shares down 14.5% on the same day

·         Earnings (EBIT) from its Australian beverage business slumped by 14.1% over the half to $226.5Million while profit margins also worsened. CCL has noticed continued deterioration since the Federal Budget in May which kept consumer confidence and spending soft. Strong competition, a rise in private labels and weak demand for Carbonated Soft Drinks has also kept trading challenging

·         A $0.20/share 75% franked interim dividend was announced, payable to eligible investors on 7 October. 26 August is the ex-dividend date. CCL has a 5.94% dividend yield (close to IAG’s and more than TLS’s)

·         Looking ahead, Managing Director Alison Watkins said that 2014 earnings are expected to be materially below 2013’s but gave no specifics. CCL management has warned that the 2H14 will be challenging due to strong competition and difficult pricing conditions but should be better than the 1H result (pre-significant items/writedowns). It expects cost cutting ($100Million over the next three years) and revenue boosting initiatives to begin positively impacting the company in FY15 .CCL shares slumped following the result and the negative outlook for the FY14 outcome

 

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

Steven Daghlian, Market Analyst,