DJ WRAP: Weak Asian Results Disapppoint Amatil Investors
DJ WRAP: Weak Asian Results Disapppoint Amatil Investors
Ambereen Choudhury Dow Jones Sydney
Australian soft drinks company Coca-Cola Amatil Ltd. on Wednesday said first half net profit rose 16 percent but disappointed investors with weak performances from operations in South Korea and Indonesia.
The company, which is 35 percent owned by The Coca-Cola Co., said net profit rose to A$109.5 million from A$94.2 million a year earlier. Its result beat market expectations for net earnings of A$105.7 million in the latest six months ended June 27.
A rise in the interim dividend to 10 cents a share from eight cents had been widely tipped, with solid growth from Australian and New Zealand operations also providing few surprises. Total sales fell 2.9 percent to A$1.7 billion.
Shares in C-C Amatil fell 10 cents or 1.7 percent to A$5.73, off a day's low of A$5.66.
Analysts and traders attributed the share price slump to lower than expected profit contributions from Asia and downbeat forecasts for the region over the next six months, even though the company reaffirmed that annual net profit could rise as much as 15 percent.
The company said its two Asian businesses will continue to be affected by poor consumer confidence in the coming months. Earnings in the second half from Indonesia are expected to be flat compared to the first half, while South Korea will post weaker earnings in the second half compared with a year ago.
"They (South Korea & Indonesia) continue to experience difficult trading conditions," managing director Terry Davis told reporters and analysts.
The company is taking a long term view on its investments in those countries. "Are those two countries on the divestment list? No they are not," Davis said.
Earnings before interest and tax slipped 30.9 percent to A$23.9 million from its South Korean business while its Indonesian operations reported a 46.2 percent dive to A$5 million for the first half.
Profit from Australian operations jumped 24.3 percent to A$162.5 million, while Oceania posted a 32.3 percent gain to A$38.5 million. Oceania consists of New Zealand, Papua New Guinea and Fiji.
"The Australia and Oceania results came in A$10 million higher than we were anticipating," said UBS analyst David Roberton in Sydney.
"But with Asia...it is A$20 million below the ebit we were anticipating," Roberton said.