Amid all the panic buying in supermarkets across the country, one leading product supplier has withdrawn its earnings guidance for its 2020 financial year – 9 months before the year ends.
Yesterday fizzy drinks giant, Coca-Cola Amatil became the latest company to drop its earnings guidance because of the impact of the coronavirus.
In a statement to the ASX before trading opened, Coca-Cola said the rapid escalation of containment measures to curb the virus came ahead of what were traditionally strong trading periods for the company – Easter and Ramadan.
It also pointed to impacts on its sales from the widespread cancellation of major sporting, cultural and entertainment events, and softer tourism.
“We have seen a significant escalation of measures taken by governments in each of our markets in an effort to slow the rate of COVID-19 infection. These are having and will have a myriad of consequences for our customers and our businesses,” the company said.
“Given the significant uncertainty in relation to the duration and impact of the COVID-19 pandemic, we no longer feel it is appropriate to continue to provide earnings guidance,” it said.
Coca Cola had told the market when it released strong full-year results in February that it was expecting mid-single-digit earnings per share growth in 2020 and also in the medium term.
In Tuesday’s statement, Coca-Cola Amatil did say that it was seeing strong growth in sales in the grocery channel in Australia and New Zealand as consumers stock up on goods. But in Australia, it warned that this growth was “offset by On-The-Go (OTG) channels (fast food, cafes, convenience stores, etc) which have been soft, following the bushfires in January”.
The company warned that this softness is expected to continue, given the mood among consumers to stay at home during the current crisis and the cancellation of large public events in the wake of government orders to ban gathering of more than 500 people.
“In Indonesia, we are seeing a reduction in foot traffic as people stay home with Bali volumes impacted by the severe decline in tourism,“ the company added.
“As the situation continues to unfold, Amatil’s overriding priority is the safety and wellbeing of our people. We will continue to support our customers and our local communities, and at this stage, we expect we can continue to operate our business and avoid significant supply chain disruption while maintaining our workforce during this challenging time,” CEO Alison Watkins added in the statement.
Shares in Coca-Cola Amatil closed down 3% at $9.71, but they then bounced to end the day down 0.1% at $10.01. That was after a 4.6% slide on Monday.
Amatil’s AGM is scheduled for May 26, and the company said yesterday that arrangements are being made to provide online access to the meeting for shareholders.
