Coca-Cola Upbeat on H1 2012 Profit Gains amidst Trading Difficulties
Australia's general trading environment is far from being ideal but Coca Cola Amatil (CCA) is upbeat that profit gains will mark the initial half of its calendar 2012, which will be anchored on specific expansion moves.
Speaking at the annual gathering of Coca-Cola investors in Sydney on Tuesday, CCA managing director Terry Davis revealed that the company has so far turned in considerable performance results despite "the difficult trading and consumer environment."
Amidst the existing challenges that the retail sector has been up to, "CCA expects to generate around 4 to 5 per cent growth in net profit for the first half of 2012, before significant items."
The current year presented significant indicators that CCA's initiatives in both Indonesia and Papua New Guinea would pick up as projected plus the looming prospects of expansion in the South Pacific as represented by the addition of Fiji beer into the group's operations.
"We remain confident about developing the many opportunities we have for our alcoholic beverages business," Mr Davis was quoted by the Australian Associated Press (AAP) as saying in sharing the good news to CCA shareholders.
The entry of the Fiji brewery into CCA's realm would cost the firm about $62 million, which largely would write off the $34.2 million that SABMiller paid to Coca-Cola in exchange for spirit division of Foster's, which was partly owned by CCA and acquired by the UK-based brewer.
Mr Davis added that more capital expenditures will be required to finally attune CCA's SPC Ardmona food division, which he admitted was being battered by cheap competition offered by local retailers' so-called home brands or private-label imports.
"Many of these come from countries that do not have the same stringent quality standards or the same favourable labour conditions as Australia," the CCA chief lamented.
Add up the difficulties posed by the high Australian dollar, Mr Davis said local food processers will continue to struggle unless "major Australian retailers will lift their support for domestically-produced brands ... or face the consequence of having a diminished Australian food industry."
Setting aside that part of CCA's business, Mr Davis said that the company's general prospect is somewhat rosy thanks much to the newly forged business partnership with "some of the world's leading international premium beer brands."
These deals will complement Coca-Cola's in-placed distribution network, which in turn will deliver promising new products to CCA's existing customer base.
Targeted markets outside of Australia are Fiji, New Zealand, the Pacific Islands and Papua New Guinea - all of which will have a taste of CCA's new premium beverage brands in the form of Grupo Modelo, Carlsberg and Molson Coors.
"CCA will now have a stronger beverage portfolio offering across the Pacific region, and these partnerships will complement our growth plans with the potential acquisition of Foster's Fiji brewery and distillery which makes Fiji Bitter and Bounty Rum," Mr Davis said.