CCL’s Shares Plunged By More Than 14% Over Poor Outlook

  • Nov 30, 2018 AEDT
  • Team Kalkine
CCL’s Shares Plunged By More Than 14% Over Poor Outlook

Coca Cola Amatil Limited (ASX: CCL) hosted its Investor Day on 30 November 2018 in which the company provided its update on progress made in 2018 and outlined some initiatives planned for 2019. Following the release of the company’s updates, the share price of the company decreased by 14.455% as on 30 November 2018.

As per the company’s announcement, the New Zealand & Fiji and Alcohol & Coffee businesses of the company are expected to experience growth in the financial year 2018, aligned with the company’s Shareholder Value Proposition. According to Group Managing Director Ms. Alison Watkins, the financial year 2018 has been impacted by separate container deposit schemes which were executed in the areas of New South Wales (NSW), the Australian Capital Territory and Queensland. FY 2018 is also getting impacted from the soft market conditions in Indonesia.  

Further, the financial year 2018 was also affected by the company’s accelerated reinvestment of around $40 Mn of cost savings in Australia. In H2 2018, Australian Beverages is demonstrating some positive signs however volumes are slightly lower than 2017 and in Indonesia the NARTD (Non-Alcoholic Ready to Drink) demand remained soft in 2018, and local results were also impacted by the cost pressures and a weak currency. The Company reported that the operational issues which were recognized in Papua New Guinea at the beginning of 2018 are expected to be resolved by the end of 2018. It is estimated that SPC is going to incur a loss of around $10 Mn in FY18, which will result in an overall loss for the company’s Corporate, Food and Services segment.

The company is also expecting one-off costs of around $50 Mn in 2018, mainly from its cost optimization programs and it is expected that these costs will be reduced by one-off gains from property divestments in the year 2018.  The company believes that there are several prospects for growth in SPC which include new products and markets and further efficiency improvements and as per strategic review of 2018 the best way to take advantage of these opportunities is through SPC’s divestment. It is expected that the Company’s corporate, Food & Services segment, excluding SPC will go down in the next year, on the back of lower property rental and services earnings, increased Group capability and investment in IT platforms.

The Group capex of 2018 is expected to be around $350 Mn, lower than originally anticipated due to deferred payments on equipment for capacity expansion at Richlands into 2019. The Group capex in 2019 is expected to be similar to Group capital expenditure in 2018, reflecting the deferred payments from 2018 and continued deployment of capital in Indonesia, including a second affordable small sparkling pack line.

In the last six months, the share price of the company increased by 17.03 percent as on 29 November 2018. CCL’s shares traded at $8.640 with a market capitalization of circa $7.31 billion as on 30 November 2018 (AEST 4:00 PM).


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