Investment Thesis
- Currently under a takeover target.
- Structural challenges – consumers moving away from carbonated soft drinks (CSD).
- Increased competitive pressures from other beverage companies or margin pressure/erosion from supermarket chains.
- Cost pressure eroding margins, including the NSW container deposit scheme.
- CCL not being able to push through price increases to clients.
- CCL has a strong global brand portfolio with diversified product offering.
- Strong growth in NZ, Indonesia and PNG.
- Management is focused on cost out and reinvestment, growing efficiency and margins as a result.
Key Risks
- CCL unable to sustain the turnaround especially in International segments.
- Company meets or exceeds its full year guidance.
- Increased competitive pressures.
- Cost pressure eroding margins, including the NSW container deposit scheme.
- CCL not being able to push through price increases to clients.
- International segment unable to deliver growth.
Key Financial Results
- Volumes for the year were down -4.2% over pcp and revenue declined -3.5% to $2.94bn with a more pronounced decline in ongoing EBIT (down -14.7% to $362.6m with margin down -170bps to 12.3%) due to changes in channel and pack mix (multi-serve PET and multipack cans increasing and demand for immediate consumption offerings decreasing) as consumer behaviour responded to Covid-19 lockdown measures. Management have seen a recovery in volumes starting 2H20, with strong momentum carried into January 2021 trading.
- The Company was able to achieve market share gains in the non-alcohol ready to drink (NARTD) market which grew during the year, delivering NARTD volume share gains of +0.7% with Coca-Cola Trademark increasing its volume share by +0.4%.
Company Profile
Coca-Cola Amatil (CCL) manufactures, distributes and sells carbonated soft drinks along with still and mineral waters, fruit drinks, ready-to-drink coffee and tea and flavoured milk drinks. CCL also rents and services commercial refrigeration equipment to food/beverage manufacturers.
(Source: BanyanTree)
General Advice Warning
Any advice/ information provided is general in nature only and does not take into account the personal financial situation, objectives or needs of any particular person.