Resilient beverage division drives Coca-Cola Amatil’s profit growth
Coca-Cola Amatil, Australia’s largest soft drink bottler, has reported their first half profit after tax has risen 22% to $171.9 million.
The distributor of Coca-Cola in Australia advised that stronger cash control was one of the reasons for the increase. New beverage products added impetus to the results, with the Mother re-launch, Kirk’s Ginger Beer, Powerade Edge and Recovery and Glacéau – which is likely reap sales 4 times the original forecasts – among the successful new products introduced to the Australian marketplace. Mother, which represents the company’s desire to gain a foothold in the energy drink market, is delivering ahead of expectations with strong initial results following a promotional campaign which highlighted that the new Mother tasted “nothing like the old one”.
Their alcohol division, Pacific Beverages, banked strong returns as their share of the premium beer market grew to 7%.
“CCA has delivered another strong profit result in tougher trading conditions with excellent performances from the Australian and New Zealand beverage businesses, and the continued growth of our Indonesian operations,” CCA CEO Terry Davis said. “The result has been driven by well balanced revenue and mix management and tight cost control programs across the business. In addition, CCA continues to benefit from efficiency gains from its capital spending program while the manufacture and distribution of alcoholic beverages contributed nearly 20% of the Australian beverage business growth.”
The resilience of the Australian beverage operations, was particularly pleasing for the company. “The Australian business delivered 10.0% EBIT growth for the half despite being impacted by poor weather and heavy discounting by our major competitor in the first quarter. The earnings result was driven by a strong second quarter trading performance with 2.0% volume growth while continuing to recover cost increases and grow margins,” Mr Davis advised.
In the Food & Services Division CCA reported growth of 7.2% in a “difficult environment”, as Grinders grew its share of the coffee market and Neverfail delivered solid results. The expansion of SPC Ardmona in the UK and Canada continued, while their Australian SPC operations were able to maintain earnings. The company expects more than 35 new products to be launched by SPC over the coming year.
The challenges to SPC were outlined two weeks ago when the company scaled back their Victorian operations due to “increasing pressure because of the combined effects of the drought and a higher currency”. The restructure will result in the Mooroopna plant scaling down production to tomatoes, fruit snacks and some juice and paste production. “SPC Ardmona is proactively taking this restructure to ensure our business remains competitive in the Australian and international markets,” Nigel Garrard, Managing Director of SPC Ardmona, advised earlier this month.
CCA was bullish about the future with a “robust” financial position and “at least high single digit” profit growth anticipated.