Things are going well for Coca-Cola at the moment, or rather Coca Cola Amatil Ltd (CCA), the bottler of the soft drink and a slew of other products here, in Indonesia, PNG and New Zealand.
Despite a noticeable impact of the recession on demand in Australia and New Zealand, the company told shareholders at Friday’s AGM that it expects to increase profit in the first half of fiscal 2009 after a hotter summer increased demand for beverages.
Helping the boost are stronger performances from the company’s Indonesian and PNG operations which seem less impacted by the global slump and credit crunch.
Profit for the six months to June is likely is likely to have high single digit percentage growth over the year before, Sydney-based CCA said in a statement to the meeting and to the ASX.
The shares rose 11 cents to $8.60 on Friday.
With CCA’s earning a profit of $172 million in the first half of last year, a 5% rise would take the net figure for the 2009 first half to over $180 million.
"CCA expects to be able to deliver high single digit growth in both earnings before interest and tax and net profit after tax for the first half.
"This guidance is consistent with current market consensus of high single digit growth in earnings for CCA for the 2009 full year.
CCA’s Group Managing Director, Mr Terry Davis said, "Given the external environment, I am very pleased with how the business is tracking against its key priorities of new product and new customer expansion.
"The material lift in CCA’s service levels has been rewarded by increased business from our customers and strong consumer demand for our market leading brands during this very volatile period."
"I would expect that the lower mortgage interest rates, July income tax cuts and continued low petrol prices are all likely to have a positive impact on consumer discretionary spending and, as a result, on CCA’s second half trading.
"However, this has to be weighed against the offsetting impact of a decline in consumer sentiment and the forecast increase in unemployment over the next six to twelve months", Mr. Davis said in the statement.
CCA also said there had been a shift in consumer behaviour to buy beverages from fast-food outlets and supermarkets to then drink them at home, rather than at restaurants and cafes.
"The Australian beverage business has achieved strong volume and revenue growth for the year to date and this is expected to drive high single digit growth in earnings before interest and tax for the first half.
"The favourable summer weather over most of Australia in the first quarter has driven strong demand for higher value single serve products, including new products, while the two Federal Government economic stimulus packages have also supported increased consumer retail activity.
"The Australian beverage business has achieved strong volume and revenue growth for the year to date and this is expected to drive high single digit growth in earnings before interest and tax for the first half.
"The favourable summer weather over most of Australia in the first quarter has driven strong demand for higher value single serve products, including new products, while the two Federal Government economic stimulus packages have also supported increased consumer retail activity.
"The economic downturn has resulted in a noticeable shift in consumer behaviour.
"Demand for beverages in restaurants and cafes has slowed, but this has been more than balanced by the increased sales in quick-service restaurants and for take-home products in the grocery channel.
"The increase in at-home consumption has fully offset the reduced demand at on-premise outlets.
"New Zealand & Fiji – After a very strong first half in 2008, macroeconomic conditions have deteriorated and this has impacted on consumer discretionary spend in both countries.
"Despite this, the New Zealand & Fiji business expects to deliver solid local currency earnings growth for the first half.
"Indonesia & PNG – Indonesia has experienced a strong start to the year, with excellent volume and revenue growth driven by increased demand for higher value one-way packs in both the modern and traditional channels and successful new product launches, including Minute Maid Pulpy orange juice and Sprite Zero.
"In PNG, the increased placement of cold drink coolers and the benefit of the acquisition of the Rabaul territory from The Coca-Cola Company in January have contributed to the strong volume and revenue growth in the year to date.
"Food & Services – SPC Ardmona (SPCA) has made a solid start to the year with good volume growth in Australia in all major categories – fruit, fruit snacks, baked beans & spaghetti, tomatoes and spreads.
"This growth was due to successful new product launches as well as a weaker Australian dollar relative to the prior period, which made SPCA’s packaged fruit and vegetable products more competitive in the export market and better placed to compete against cheap imported home brands in the domestic market.
"In addition, the restructure of the Australian manufacturing operations has also been completed and is on track to deliver approximately $3 million in savings in the first half and approximately $5 million in the second half.
"Pacific Beverages Joint Venture – Pacific Beverages continues to grow its share of the Australian premium beer market, with premium beer volu
