AUS: Coca-Cola Amatil confident on profits rise

Coca-Cola Amatil has said that it expects high single-digit profits growth for the first half of 2009.

Strong year-to-date sales in the group's key Australian business will be the main driver of profits growth in the first six months of the year, Coca-Cola Amatil (CCA) said in a trading update today (22 May).

Managing director Terry Davis said: "Given the external environment, I am very pleased with how the business is tracking against its key priorities of new product and new customer expansion."

High single-digit growth in both operating profits and net income is likely to continue into the second half of the year, CCA predicted.

Good summer weather in Australia has boosted sales of single-serve drinks in the country in recent months, with the Glaceau vitaminwater and Mother energy drink brands performing particularly well, the firm said. A rise in at-home consumption has offset declines in the on-trade market, it added.

In beer, CCA's joint venture with SABMiller, Pacific Beverages, has reported a 50% rise in volumes in the year-to-date. Part of this was credited to the launch of Peroni Leggera, a light version of Peroni Nastro Azzurro.

CCA fired a warning shot over "higher discounting by competitors" in the beverage market during the year so far.

"There has been significant disruption in the Australian beverage market landscape as a result of the recent ownership changes of competitor beverage companies," it said. Japanese firm Asahi recently completed its buyout of Cadbury's Australasian drinks arm.

Elsewhere in CCA's business, Indonesia has seen a strong start to the year, but New Zealand and Fiji have been hit more acutely by the downturn in consumer spending as a result of tough economic conditions.

Looking forward, Davis said that lower mortgage interest rates, income tax cuts and low petrol prices may help to boost consumers' disposable income.

"However, this has to be weighed against the offsetting impact of a decline in consumer sentiment and the forecast increase in unemployment over the next six to 12 months," he said.