Coca-Cola Amatil is down more than 10 per cent after slashing its earning forecast for the first half.
At the company’s annual general meeting in Sydney today, managing director Terry Davis said first half earnings could be lower by as much as nine per cent, in part thanks to heavy discounting on soft drinks
Davis told investors that strong performance in Indonesia, New Zealand, Fiji and Australian in non-grocery activity was not enough to offset difficult trading conditions in Australian beverages.
“We have made some great progress, and whilst current conditions may be tougher than we would have hoped for, the financial and market position of the company has never been stronger,” Davis said.
“For the 2013 full year we are most positive,” Davis said, with earnings expected to improve in the second half, taking the total figure to something similar to the $896 million it made in 2012, before significant items.
Davis said Coca Cola also expects to declare a 10.4 per cent increase to its first half dividend.
“While we have experienced a tough start to the year, we believe in continuing to reward shareholders along the way,” he said.
Competitors have forced Coke’s prices down, Davis explained, and consumer sentiment has dampened volumes. He also said overseas companies are putting pressure on Australian producers, by importing canned fruit.
Coca Cola Amatil owns the SPC Ardmona packaged fruit business.
“We are not immune to the fallout that has occurred in consumer sentiment which has flowed through to reduced consumer spending, with many food and beverage categories – including our own – experiencing flat or declining volumes so far this year,” he told shareholders.
The company was just over ten per cent, or $1.45 down this afternoon, trading at $13.00 at 12:26 PM.
Meanwhile, earlier this week Coles boss Ian McLeod took a swipe at Coca Cola, telling Fairfax its products were too expensive in Australia, compared with the prices they sell for overseas.
“When it’s [products] 60 per cent cheaper then you start to question why it should be so much more in Australia,” he told Fairfax.