Coca Cola Amatil's NZ business boosts earnings in 2016 on higher volumes

Wednesday 22nd February 2017

Coca-Cola Amatil's New Zealand business generated bigger annual earnings in 2016 as the local bottler of Coke-branded drinks ramped up sales volumes with skinnier margins as part of a strategy launched three years ago.

Sydney-based Coca-Cola Amatil said New Zealand and Fiji, which are bundled into a single division, reported strong growth in 2016 contributing 15 percent of the group's earnings for the year. Earnings before interest and tax rose 6.9 percent to A$105.6 million in calendar 2016 on a 7.5 percent gain in revenue to A$551.5 million.

Revenue per unit shrank 2 percent to A$7.81 per case and the volume of sales was up 9.6 percent to 70.6 million cases, in what's been a concerted drive for volume-based growth to deliver low single digit ebit growth as the value proposition for shareholders.

Coca-Cola Amatil said the New Zealand business' revenue, sales volumes and earnings had benefited from a tie-up with Restaurant Brands New Zealand, which operates the local franchises for KFC, Carl's Jr, Starbucks and Pizza Hut, while its still beverages sales showed a strong performance, especially in water and energy.

The company wants the New Zealand business to focus on sales execution and category leadership in 2017 with stronger manufacturing and distribution capabilities.

Group profit sank 37 percent to A$246.1 million, including a A$171.8 million impairment charge largely on the SPC canned fruit and vegetable unit. Underlying earnings were up 6.2 percent to A$417.9 million on a 1.1 percent gain in trading revenue to A$5.15 billion, and the company signalled plans to overhaul its Australian beverages supply chain, shifting manufacturing to Queensland from South Australia.

The board declared a final dividend of 25 Australian cents per share, up from 23.5 cents a year earlier, and taking the annual payout to 46 cents.

The ASX-listed shares rose 6.5 percent to A$10.555.

BusinessDesk.co.nz

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