Coca-Cola Amatil is the latest discretionary business to fall foul of weaker than expected consumer demand following the election and now expects its full-year earnings to slide by between 5 and 7 per cent in calendar 2013.
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 coming out of 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 September 7 election and that spending by shoppers remained at pre-election lows.
Coca-Cola Amatil, which owns a portfolio of non-alcoholic and alcoholic beverage brands, said while there had been an improvement in its local business in the third quarter, fourth-quarter trading to date was not seeing 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 on 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."
It is believed pricing pressure from Pepsi has cost the group sales and earnings momentum. At the release of CCA's interim result in August Mr Davis said discounting by the release of Pepsi Next had caused disruptions in the market.
Coca-Cola Amatil said in the wake of the continued lull in consumer spending the group was forecasting a 5 to 7 per cent decline in full-year earnings for its 2013 year, as well as an impact of about 1 per cent to 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 levels of 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 exclusion, Coca-Cola Amatil said it had signed a long-term deal to distribute US beer Samuel Adams 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 step downs next August.
Adele Ferguson— Page 30