By Rhiannon Hoyle
SYDNEY--Coca-Cola Co.'s (KO) Australian distributor reported a
16% decline in first-half profit as its Australian soft-drinks unit
remained locked in a retail-price war, and subdued consumer
spending meant promotions didn't bolster sales as hoped.
Coca-Cola Amatil Limited (CCL.AU), 29% owned by the U.S.
beverage giant, Wednesday said net profit fell to 182.3 million
Australian dollars (US$169.6 million) in the six months through
June, versus A$215.9 million a year earlier.
"Promotional activity yielded disappointing results and rate
realization continued to be under pressure due to weaker consumer
demand, aggressive competitor pricing and private label activity in
both water and flavored carbonated beverages," the company said in
a filing to the Australian Securities Exchange.
It said market conditions had deteriorated since Australia's
federal budget was announced in May, with evidence of consumer
"promotional fatigue consistent with weaker consumer
sentiment."
The company cut its interim dividend to 20 cents a share, from
24 cents at the same time last year. That represented a payout
ratio of nearly 84%, though, above the group's target of 70-80%,
Coca-Cola Amatil said in the filing.
Coca-Cola Amatil produces and distributes the flagship Coke
brand in Australia and four neighboring countries, where it goes
head-to-head with PepsiCo. Inc. (PEP) in the cola drinks market. It
also distributes the premium-spirits portfolio of Beam Global
Spirits & Wines, such as Canadian Club whiskey.
In April, the business announced it had begun a strategic review
of its food and drinks operations to seek ways to cut costs and
boost productivity.
On Wednesday, executives outlined plans to overhaul its
Australian beverage business, including cutting more than A$100
million in costs over the next three years, increasing its range of
low calorie drinks, and boosting spending on marketing its
products.
Coca-Cola Amatil said it continues to assess its strategy for
its business in Indonesia, where the company said it faces
headwinds from substantial cost inflation and intensifying
competition from a rising number of rivals.
Write to Rhiannon Hoyle at rhiannon.hoyle@wsj.com
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