Coca-Cola Amatil Ltd shares rose yesterday after the company delivered on its lowered guidance for the year to December, and indicated that it had made a solid start to 2011.
The shares finished up 31c or, 2.7%, at $11.68.
That’s still around a dollar under the 52 week high of $12.74 set late last October before the company first warned that the cool, mild and wet weather was having an impact on demand and profit.
The outcome is around the guidance issued then and in the update at the start of January, hence the positive market reaction yesterday.
The company said in a statement to the ASX that profit rose to $497.3 million for the 12 months to December 31 compared with $449 million in the prior corresponding period.
Net after tax profit before significant items hit a record $506.6 million in 2010, up $57.6 million, or 12.8%, on the 2009 full year result. Earnings before interest and tax were up just over 7%, about what the company had said they would be in the revised guidance last year and last month.
Revenue rose 1.2% to $4.49 billion, indicating the company managed a very nice expansion of profit margins during the year.
So it was no wonder that CCA declared a final dividend of 28c a share, fully franked, up from the final of 25c paid in 2009.
That put total dividend at a record 48.5c a share, up 10% from the 43.5c a share paid for all of 2009.
"Notwithstanding the continued softness in consumer spending, the Australian business has made a solid start to 2011 with volume and revenue growth ahead of last year in all states except Queensland," CCA chief executive Terry Davis said in the statement yesterday.
CCA’s volumes fell – down 1.8% across in Australia and 7.5% in Queensland, meaning they were up in other states.
"We have a pipeline of high returning capital projects that will deliver efficiency, service and revenue gains right across the business."
Mr Davis said 2011 would be a peak year for capital projects with an overall spend of about $400 million on capacity and capability improvements.
That would include about $100 million to be spent in Indonesia on capacity expansion.
The company said it expected the beverage cost of goods sold per unit case to increase by 3.5% to 4% as commodity prices gained.
He said CCA had the majority of commodity and currency hedges in place and manufacturing efficiency gains were likely to offset most of the cost increases.
According to media and analyst reports, Coca Cola Amatil faces several challenges this year and not referred to by the company yesterday in its media statement.
These were the possibility that its beer partner, SABMiller might bid for Foster’s beer operation and thereby dissolve the distribution and production agreement that forms the heart of CCA’s alcoholics business.
And the owner of Jim Beam has put itself up for sale. CCA has a rebottling agreement with Jim Beam which, with the beer business, helps its distribution business. There are talks that the Jim Beam agreement might be up for renegotiation anyway.
