AUS: Non-carbs fuel Coca-Cola Amatil profit growth
Coca-Cola Amatil (CCA) has seen its net profits increase 16.8% to A$145.2m in its first half, driven in part by growth of non-carbs and innovation, the company said today (10 August).
The soft drinks bottler said earnings per share increased by 11.9% to 19.8 cents, while EBIT increased by 10.2% to A$267.4m.
"The result was delivered against a background of a softer consumer environment, particularly in the first quarter, more competitive trading conditions and the impact of two less trading days," a statement said.
Australia achieved strong EBIT growth of 9.8% (up A$19.4m) and continued to grow its operating EBIT margin to 21.3% (up from 20.1% in 2004).
CCA said the earnings growth resulted from solid revenue management, further product and package innovation, growth in non-carbonated beverages, continued cold drink equipment placements and new outlet expansion. The softer trading environment experienced in the first quarter improved markedly in the May/June period, it added.
Pacific (New Zealand & Fiji) recorded flat EBIT, due primarily to a lower EBIT result from New Zealand, which had a soft start to the year with greater price competition, particularly in the juice category. Revenue growth for the region, however, was strong at 10.2%. In local currency, New Zealand increased sales by 4.8%. Fiji delivered strong growth in both sales and earnings.
South Korea recorded a decline in EBIT to A$0.9m. CCA said trading was impacted by continued low consumer demand and a highly competitive environment.
Indonesia, CCA said, continued its improved performance and in local currency terms delivered its best first half EBIT and EBIT margin in four years. "This is an excellent outcome in an operating environment dealing with natural disasters and higher raw material costs," the company said.
Coca-Cola Amatil's group managing director, Terry Davis, said: "The group's beverage EBIT margin, achieved in more difficult trading conditions, is testimony to the discipline applied in revenue management, balance between volume growth and need for recovery of cost of goods sold increases and indirect expense control. The solid result was achieved on beverage revenue of A$1.7bn and a 0.5% increase in volume to 303m unit cases."
On the basis of a continuation of current trading conditions, CCA said that it expects to deliver low double digit net profit growth for the second half of 2005.
However, the company warned that it may be hit by higher raw material costs and weak consumer confidence in South Korea that could impact its volume growth in the second half.
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