What is cooking up with Coca-Cola Amatil Limited (ASX: CCL)?

Coca cola

Coca-Cola Amatil Limited (ASX: CCL) witnessed its shares advancing by 2.2 per cent to $9.78 on September 27, 2018 as there is a speculation that is doing the rounds in the market that CCL may be a leading bidder for buying Lion Dairy & Drinks, which has been slated for sale in the month of October 2018. Mainly, strengths of the group are being discussed and speculated to have Lion Dairy & Drinks under its bucket of brands and products.

This Australian non-alcoholic beverage manufacturer is understood to have developing interests in brands that include Berri juice, Big M flavoured milk brands and Dare iced coffee. While CCL might have snubbed off the queries pertaining to the above discussion at the moment, the market expects some outcome post the strategic review of the business in discussion that is said to get completed by mid of October. The market also believes that if the group garnered such a move, the same will help CCL expand its brand suite and expedite sales growth with focus on non-carbonated drinks.

Coca-Cola Amatil had earlier reported its half year result which was on the positive side. Group’s statutory net profit after tax surged by 12.85 per cent to $158.1 million for the half year period ended June 30, 2018; while revenue from ordinary activities were reported to be of the order of $2,430.4 million, i.e., down 1.81 per cent against last year revenue. This led the Basic and Diluted EPS of 21.8 cents against last year corresponding period’s figure of 18.5 cents last year; however, the interim dividend was upheld at 21 cents only. 

In the past one year, CCL stock has moved up about 24%, as at September 26, 2018. The group has a market capitalisation of $ 6.93 billion and the stock trades at a price to earnings level of 15.17x while the dividend yield of the stock is around 4.91 per cent. The group has been up and running in improving its Australian beverages volumes while New Zealand and Fiji have performed decently. CCL also aims to reinvest cost savings to set a better path for revenue and earnings generation. CCL is now targeting mid-single digit earnings per share growth in the medium term. However, the group is cautious of its Indonesian business and regulatory norms, at large, while it looks for growth options for Australia’s leading processor of packaged vegetables and fruits, SPC.

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