ASX-listed Coca-Cola Amatil Ltd (ASX: CCL) shares could trade softly today as ASX 200 futures look mixed.
Coca-Cola Amatil is the Australian distributor and rights holder to the famous Coca-Cola brand (which is owned by the US parent Coca-Cola Company).
Coca-Cola Amatil started life in 1904 as British Tobacco Company. The ‘Amatil’ in its name came in 1977 when it was renamed as Allied Manufacturing and Trade Industries Limited (AMATIL).
What’s Going On?
At its AGM today, the Australian distributor of Coca-Cola products, Coca-Cola Amatil Ltd (ASX: CCL), released an update on its 2018 financial year.
“As anticipated, FY18 is being impacted by our accelerated reinvestment of approximately $40 million of cost savings in Australia,” CEO Alison Watkins said.
In the SPC canned food division, Watkins said the business will record a full year loss of around $10 million. What’s more, this business is finally on the chopping block to be sold.
“We are also expecting one-off costs in 2018 of approximately $50 million, primarily from our cost optimisation programs,” Watkins added.
Further afield, Watkins added that 2019 will be yet another transitional year as it seeks to invest heavily in Australia and Indonesia. The company remains committed to its medium-term target of “mid-single digit” profit per share growth.
In late October 2018, Coca-Cola Amatil’s parent company and partner, The Coca-Cola Company (NYSE: KO) announced that it would write down the value of its operations in Indonesia, a fizzy drink market which has been long on promise and short on delivery.
Here in Australia, growth has been hard to come by in recent years as Pepsi Co increases competition and consumers push back against sugary drinks.
I find it hard to see how Coca-Cola Amatil will steer its way to consistent profit growth in the near future. At least, enough to make it a market-beating investment.
A few years ago, they were also targeting ‘mid-single digit’ profit growth which, if that can be achieved, isn’t the worst case scenario (especially with a handy fully franked dividend).
However, I know I don’t have to buy every share on the ASX. So I’m happy to let Amatil shares slide through to the keeper for time-being and find some better opportunities elsewhere (see below).
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Disclaimer: Any information contained in this article is limited to general financial/investment advice only. The information has not taken into account your specific needs, goals or objectives, so please consider consulting a licenced and trusted adviser before acting on the information. Please read The Rask Group’s Financial Services Guide (FSG) for more information. This article is authorised by Owen Raszkiewicz of The Rask Group, which is a corporate authorised representative No. 1264179 of Strawman Pty Ltd (ACN: 610 908 211) (AFSL: 501 223).