Coca-Cola Amatil Annual Profit Rises But Australia Beverages Struggle
By Mike Cherney
SYDNEY--Australian bottler Coca-Cola Amatil Ltd. (CCL.AU) said its 2017 net profit rose by 81%, but the increase stemmed from one-off writedowns in the prior year and the company continued to struggle with declining revenue in its main Australia beverages unit.
Coca-Cola Amatil said its annual net profit was 445.2 million Australian dollars (US$350.9 million), compared to A$246.1 million in 2016. But underlying net profit, which strips out one-off items such as 2016 writedowns on plants and equipment, fell by 0.4% to A$416.2 million. The company previously said it expected underlying net profit to be broadly in line with the 2016 result.
Total annual revenue fell 3% to roughly A$5 billion, with revenue in the company's main Australia beverages unit down 3.3%. Case volume, meanwhile, fell by 2.5% in the Australia beverage unit.
Still, the company declared a final dividend of 26 Australian cents per share, a 4% increase on the prior period.
Looking ahead, the company said a previously announced growth plan for its Australia beverages unit would see an additional investment of A$40 million in 2018 across marketing, equipment, technology and price, which would weigh on near-term earnings. Nonetheless, Coca-Cola Amatil said it continues to target mid-single digit earnings per share growth in the medium term.
Coca-Cola Amatil has been struggling with poor performance in Australia, as consumers move away from sugary, carbonated beverages in favor of healthier options. Coca-Cola Amatil rolled out a new sugar-free formulation, called Coke No Sugar, in Australia in the middle of last year to help revive sales. The company also bet that bottled water, like its Mount Franklin brand, and would offset sugary-drink declines.
Despite the full-year declines in Australia, the company said the business improved its trajectory in the second half.
Other challenges facing the company include new container-deposit schemes in various Australian states, including New South Wales, which forced the bottler to raise prices. The higher prices could turn off consumers, but a troubled rollout of the program in New South Wales--with few collection points--appears to have hampered public participation so far, some analysts say.
-Write to Mike Cherney at firstname.lastname@example.org
(END) Dow Jones Newswires
February 20, 2018 18:13 ET (23:13 GMT)Copyright (c) 2018 Dow Jones & Company, Inc.