CCA is boosting its alcohol portfolio

Coca-Cola Amatil (CCA) has posted a fall in first-half sales and profits as gains overseas failed to offset weak domestic supermarket sales.

Net profits fell by 12% to AUD215.9m (US$195.5m) in the six months to the end of June, the Sydney-based Coca-Cola bottler said today (20 August). Net sales dipped by 3% to AUD2.35bn over the same period while operating profits were down by 15% to AUD166.7m.

The company did not release second-quarter numbers.

Australia - which accounts for around half of CCA's sales and 70% of EBIT - posted a 6% drop in sales and a 10% fall in EBIT. CCA blamed weakness in the country's grocery channel and “aggressive competitor pricing”.

New Zealand & Fiji bounced back from disappointing full-year results, when the unit posted a 12% operating profits drop. First-half sales in the region were up 6.5% and EBIT was up 10%, helped by cost savings including a 10% cut in staff since last year, CCA said.

Indonesia & Papua New Guinea (PNG) enjoyed another strong performance, with a 1% rise in sales and 12% jump in EBIT adding to FY's double-digit volume and earnings growth. 

The growth came despite “challenging” conditions in PNG, which is experiencing a slowdown, CCA said.

CCA group MD Terry Davis said: “The positive for the half was the outstanding performance of the Indonesian business, which delivered double-digit volume and earnings growth whilst improving on its return on invested capital. The Australian beverage non-grocery channel performed well, delivering volume and earnings growth, while the New Zealand and Fiji businesses also returned to solid earnings growth.”

CCA said its Beam portfolio continued to “perform strongly” driven by Jim Beam extensions Jim Beam Honey and Devil's Cut.

“Another highlight was the growth of Teachers Scotch, which increased volumes around 90% driven by a strong promotional programme,” CCA said. The company today said it has extended its Beam link-up for a further ten years.

Looking ahead, CCA said it is on track to deliver up to AUD40m in cost savings from an efficiency programme launched at the beginning of the year. The company also said it hopes to gain a 1% incremental EBIT growth from its alcoholic drinks from next year onwards. It follows CCA's brewing JV agreement with winery Casella and its long-term exclusive agreement to distribute Rekorderlig cider, both announced last year.

Today, CCA said it has signed an exclusive agreement to distribute Molson Coors premium beers in Australia and the C&C Group’s beer and cider portfolio in New Zealand and the Pacific region, together with the development of a domestic premium and craft beer portfolio.

CCA's share price closed down 5.5% in today's trading on the Australian Securities Exchange.

To read the company's official statement, click here.