* H1 net profit falls 15.6 percent to $169.50 mln
* Strategic review report due end of October
* New products include 250ml, A$2 Coke can
(Recasts, updates throughout with more detail, CEO and analyst
comment, share price)
SYDNEY, Aug 20 Struggling Australian food and
beverage company Coca-Cola Amatil Ltd (CCA) warned on
Wednesday it expects to post a second consecutive drop in
full-year earnings amid weak consumer confidence and thanks to a
few management "own goals."
CCA is scrambling under new Chief Executive Alison Watkins
to address the changing tastes of its core market, launching a
smaller, cheaper Coke can and promising more sugar-free
Still, those introductions will be too late for the current
year, when it expects full-year profit to be "materially lower"
than last year.
In its first set of results under Watkins, the company
revealed on Monday that first-half net profit slid 15.6 percent
to A$182.3 million ($169.50 million), from A$215.9 million a
That was largely in line with analyst expectations of
A$184.5 million, according to Thomson Reuters I/B/E/S, but
shares fell 2.9 percent as analysts focused on the weak earnings
Watkins, who took the post in March, conceded the poor
operational result was not entirely due to external factors like
domestic price competition from Asahi Group Holding Ltd's
"Some of that is due to market forces, some is due to what
we can only describe as own goal factors," Watkins said on a
Decisions by the company last year to cut its sales staff
and stand back from promotional activity in Australia were
poorly made in hindsight, she said.
CCA in February booked an 83 percent decline in annual net
profit, its worst profit in 20 years.
Watkins is overseeing a strategic review that seeks to
restore brand value and save the company A$100 million in costs
over the next three years partly by streamlining its supply
The company is drawing up plans for more low and no-calorie
drinks and on Wednesday unveiled a new 250ml, A$2 coke can - an
attempt to gain leverage in Australia's price wars. Further
initiatives would be coming in the summer, Watkins said.
"As a business, we have been slow to adapt to these changes
in market conditions and shifting consumer trends," Watkins
Analysts said the first-half results were extremely
disappointing and wanted to see more detail on the review, which
is not expected until a scheduled analyst day in October.
"Management is still in rebase mode and we recommend caution
until it is clear this has come to an end," Citi analyst Gino
Rossi said in a note to investors.
INDONESIA AND BEER
First-half earnings before interest and tax in Australia,
which generates more than 80 per cent of profits, fell 14.1 per
cent to A$226.5 million, while earnings in Indonesia plummeted
83.4 per cent to A$5.2 million.
There has long been speculation that CCA's 30 percent
shareholder, The Coca-Cola Co, was keen to buy the
business back from CCA or team up with a partner like Mexican
bottler Coca-Cola FEMSA.
But Watkins said on Wednesday CCA was committed to both
Indonesia and its alcoholic beverages unit, which is unlikely to
reach the 1 percent contribution to profit growth that had been
flagged for this year.
CCA returned to the beer market in December after a two-year
break, but it said sales had been slower than expected due to
CCA shares were 2.9 percent lower at A$9.45 in mid-afternoon
trade on the Australian stock exchange, off an intraday low of
A$9.23. Shares have fallen around 22 percent since the start of
the year, compared with an 4.8 percent rise in the S&P/ASX 200
(1 US dollar = 1.0755 Australian dollar)
(Reporting By Jane Wardell; Editing by Matt Driskill)