Australian bottler Coca-Cola Amatil Ltd. (CCL.AU) said Wednesday that first-half net profit fell 29% as it continued to struggle with shifting consumer preferences away from sugary carbonated beverages.
The company, which counts Coca-Cola Co. as a major shareholder, said that net profit in the six months through June was 140 million Australian dollars (US$111 million). Total revenue fell nearly 4% to roughly A$2.5 billion. Revenue in the key Australian beverages unit fell 5.1%, while volume declined 3.9%.
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The decline in net profit included A$50 million in charges for the closure of a manufacturing plant and cost-optimization programs in Australia. Excluding those items, underlying net profit fell about 4%.
Coca-Cola Amatil declared an interim dividend of 21 Australian cents per share, the same as the prior period.
Looking ahead, Coca-Cola Amatil said it expected full-year underlying net profit to be broadly in line with the result in 2016. But it cautioned that its performance depends on revenue initiatives in Australia, Indonesian economic factors and regulatory conditions. The company is still targeting mid-single-digit earnings-per-share growth in the medium term.
Coca-Cola Amatil has been betting that increased sales in bottled water, including the Mount Franklin brand, would help offset sugary soft-drink declines, and that the launch of the new Coke No Sugar formulation could add some fizz. But the company has faced setbacks including a decision by Australian grocer Woolworths Ltd. not to stock Coke No Sugar, and a move by Domino's Pizza Enterprises Ltd. not to renew a beverage supply agreement.
Coca-Cola Amatil also plans to raise prices to pay for a new container-deposit scheme in New South Wales, which some analysts say could further hurt volumes.
In April, Coca-Cola Amatil warned underlying net profit would decline in the first half amid increased competition and changing consumer tastes.
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(END) Dow Jones Newswires
August 22, 2017 19:46 ET (23:46 GMT)