Coca-Cola Amatil braces for profit fall

Coca-Cola Amatil is the latest discretionary business to fall foul of weaker-than-expected consumer demand following the federal election and now expects its full-year earnings to slide by 5 to 7 per cent this year.

Coca-Cola Amatil is the latest discretionary business to fall foul of weaker-than-expected consumer demand following the federal election and now expects its full-year earnings to slide by 5 to 7 per cent this year.

Shares in the Coca-Cola bottler slid 5 per cent on news of the watered-down earnings guidance, with the company also blaming poor economic data from Indonesia where it has a sizeable presence.

The stock closed 61¢ lower at $12.28.

Woolworths and Coles have also warned recently that consumer sentiment had not improved much since the election on September 7, and that spending by shoppers remained at pre-election lows.

Coca-Cola Amatil, which owns a portfolio of non-alcoholic and alcoholic drink brands, said that despite improvement in its local business in the third quarter, fourth-quarter trading was not showing the expected post-election rise.

"The non-grocery business has continued to grow volumes in the second half. However, consumer demand has been more subdued than expected," managing director Terry Davis said in the company's November trading update.

"While we have seen some improved momentum in the Australian grocery channel, with carbonated beverages returning to growth and an improvement in market share, aggressive competitor pricing activity has continued, which has limited price realisation in the half to date."

At the release of CCA's interim result in August, Mr Davis said discounting with the release of Pepsi Next had disrupted the cola market.

Coca-Cola Amatil said in the wake of the continued lull in consumer spending the company expected a 5 to 7 per cent decline in full-year earnings for its 2013 year, as well as a fall of about 1 per cent in earnings due to the weaker Indonesian rupiah and PNG kina.

It said third-quarter demand in Indonesia had slowed as the economy adjusted to higher inflation.

"The fundamental drivers of increased consumption per capita of commercial beverages remain strong and, for 2013, we would expect the Indonesian business to deliver low double-digit volume growth and earnings growth."

As part of its re-entry into the Australian beer market after a two-year absence, Coca-Cola Amatil said it had signed a deal to distribute US craft beer Samuel Adams in Australia from mid-December.

"With just over a month left until CCA re-enters the beer and cider market in Australia, we are ready to hit the ground running with a great portfolio of beer and cider brands," Mr Davis said.

The company said it was still searching for a successor to Mr Davis, who plans to step down as chief executive at the end of next August.

Adele Ferguson— Page 24

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