Pressure mounts on Coca-Cola over RI operations

Pressure mounts on Coca-Cola over RI operations

Dow Jones, Sydney

Coca-Cola Amatil is battling pressure to exit its Indonesian
business as some blue chip investment banks, including Merrill
Lynch, continue to question the company's strategy in that
market.

Indonesia accounts for around 11 percent of Coca-Cola Amatil's
sales, 5 percent of earnings before interest and tax, and 9
percent of net assets, ranking it fourth in size behind the
company's operations in Australia, Oceania and South Korea.

Coca-Cola Amatil has been in Indonesia since 1992.

In a report released Wednesday, Merrill Lynch analysts voiced
their concerns about Coca-Cola Amatil's Indonesian strategy which
they say has become all about "price recovery and margin
protection" where previously it was focused on "product
affordability combined with a rapid increase in availability."

"The Indonesian business continues to struggle. In our view
the changed strategy for Indonesia raises the question of why
Coca-Cola Amatil would/should be in this market at all," analysts
said in the report to clients.

Merrill Lynch, which is recommending clients buy the stock,
said there is a question mark over whether the long term growth
potential of the Indonesian operations "will ever be realized."

Similarly, rival investment bank Credit Suisse First Boston
told clients Wednesday that Coca-Cola Amatil's Indonesian unit
was marked by volatility.

Credit Suisse First Boston expects the stock to underperform
the broader market.

"Earnings news about Indonesia is likely to affect Coca-Cola
Amatil's share price," analysts said.

The soft drinks maker is due to report its full year 2002
results on Feb. 13.

However, Coca-Cola Amatil maintains that it's going be a long
term player in Indonesia.

"We believe it has long-term potential," a spokesman told Dow
Jones Newswires in reference to Indonesia.

Late last year, Coca-Cola Amatil said that trading in
Indonesia in October and November had been "above expectations,"
with volume growth achieved in each of those months compared with
the same months a year earlier.

Coca-Cola Amatil's share price were under pressure in 2002
reflecting concerns about its operations outside of Australia.

Its shares closed down six cents at A$5.70 on Wednesday.

Coca-Cola Amatil is about 35 percent-owned by the Coca-Cola
Co. of the U.S.