Coca-Cola Amatil Ltd (ASX: CCL) held their Annual General meeting in North Sydney today, which seems to have pleased shareholders with the shares up 1.1%.
About Coca-Cola Amatil
Coca-Cola Amatil is one of the largest manufacturers and distributors of alcoholic and non-alcoholic beverages, coffee, and ready-to-eat food snacks in the Asia Pacific region.
In addition to their iconic Coca-Cola products, their portfolio includes other well known drinks like Sprite, Fanta, Lift, Deep Spring, Mount Franklin, Powerade and Goulburn Valley juices, and they have also invested in coffee via Grinders Coffee in Melbourne.
Its been a tough few years for Coca-Cola shareholders, with the business struggling to achieve any real growth in profits. Ms Alison Watkins was appointed the CEO five years ago and was previously the CEO of GrainCorp Ltd (ASX: GNC). During those 5 years the share price has essentially tracked sideways.
The Coca-Cola Chairman Ilana Atlas spoke first and then Managing Director Alison Watkins provided a review of the 2018 financial result, where Coca-Cola recorded an underling profit of $388 million, which was 6.5% lower than in 2017. In that result they impaired their SPC fruit and vegetable processing business to the tune of $147 million, following the conclusion of their strategic review of the asset.
Ms Watkins then discussed the outlook for 2019, which she described as being the second year of a two-year transition phase for Coca-Cola Amatil. She highlighted that in Australia one of their initiatives “feet-on-the-street’ has overseen a “volume improvement of 2% year to date compared to an 11% decline prior to commencement of the initiative in FY18″.
She reiterated that this year would be another “transition” year and CCA would not meet its target for mid-single-digit growth in earnings per share because of heavy investment in Australia aimed at reversing a long-term decline in volumes.
Ms Watkins said “we remain committed to our Shareholder Value Proposition targeting a return to delivery of mid-single digit earnings per share growth from 2020″.
Are Coca-Cola Amatil shares a buy?
The Coca-Cola business has a strong brand, has been around for a long time, and I expect it to be a around for a lot longer. At the current price of $8.93, the shares pay a nice dividend yield of 4.6% and trade on a PE of 16 times last years earnings.
However the shares aren’t for me. Profit last year is the same as it was 10 years ago, where they reported a profit of $385million. Until I start seeing some meaningful growth in profits, I would prefer to invest my funds elsewhere.
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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).
At the time of writing David does not have a financial interest in any of the companies mentioned.