Coca-Cola's shares lose fizz

MAX MASON
Last updated 13:45 11/04/2014

Relevant offers

World

Bill Gates-backed vegan burgers go mainstream after US supermarket deal Mother of Uber CEO Travis Kalanick killed in boat accident Amazon arrival no Am-ageddon for Australian retailers Ignore the kiwi on the tin: World-famous Kiwi shoe polish is 100 per cent Australian Jetstar plane starts taxiing to runway with ground worker attached to nose Australian directors hit with $651 million compensation order, fines, bans A photographer spent 25 years documenting rich people - here's what she learned Warning of global pension time bomb - US$70 trillion savings gap is growing Mark Zuckerberg tells Harvard grads that automation will take jobs, and it's up to millennials to create more Man is suing Hershey for US$5 million for 'under-filling' his box of Whoppers

Coca-Cola Amatil shares have been hit hard after it announced it expects a US$56 million ($65m) hit to earnings in the first half, following soft performances in the Australian and Indonesian beverage markets.

In early trade, shares in the company are down nearly 13 per cent at US$9.96, posting their biggest slump in 23 years.

The profit warning came as the group's new managing director Alison Watkins announced a strategic review of the business.

"We do however need to challenge our model thoroughly in light of the low growth and competitive markets in which we operate in order to deliver long-term sustainable growth," Watkins said.

Earnings before interest and tax, and significant items are expected to fall 15 per cent in the six months to June 31 from the previous corresponding period which recorded US$373.9m.

"CCA is facing a number of immediate challenges, particularly in the Australian beverage and Indonesia markets," Watkins said.

Aggressive pricing across Coles and Woolworths has limited Coca-Cola Amatil's ability to recover increased costs of doing business.

"At the full year result in February, we highlighted that we were concerned by the generally weak consumer confidence and spending environment in Australia and that we faced challenges in Indonesia with substantial cost inflation," Watkins said.

In February, at the company's full-year results, Coca-Cola Amatil shareholders were hit with a massive US$404 million writedown, following the Victorian state government's US$22m bail out of its struggling SPC Ardmona fruit cannery.

The company said SPC sales revenue had increased by 10 per cent in the first quarter and management was finalising the details of significant capital investment in the second half of 2014.

Coca-Cola Amatil shares are down 5.4 per cent for the year and last traded at US$11.40.

Ad Feedback

- Sydney Morning Herald

Special offers

Featured Promotions

Sponsored Content