By Rhiannon Hoyle
SYDNEY-- Coca-Cola Co.'s Australian distributor thinks it is
through the worst of a storm that has battered the soda market,
betting lower-calorie drinks and growth in emerging markets will
help bolster future profits.
After years grappling with flat soda sales and a high Australian
dollar that knocked the competitiveness of the country's
manufacturing sector, Coca-Cola Amatil is poised for a turnaround,
Managing Director Alison Watkins said Tuesday.
It hopes to attract new customers by offering drinks with
different portion sizes and reduced calories while looking to
expand its footprint in places such as Indonesia and Papua New
Guinea.
It has meanwhile used social media and brightly colored
cans--detouring away from its traditional red packaging--in a bid
to win over teenagers and young adults.
"We do think the worst is behind us," Ms. Watkins said on a
media call. She said Coca-Cola Amatil projected no further decline
in earnings-per-share growth after 2014, and that the company hoped
to return to mid-single-digit growth over the next few years.
It reported a 25% decline in underlying earnings-per-share last
year, following a 10% fall the year prior.
It isn't just Down Under that soda sales have been sluggish.
Coca-Cola, the world's largest beverage company, which owns a 29%
stake in the Australian distributor, is cutting costs and laying
off workers in the U.S. after a slowdown in sales across much of
the world.
In Australia, earnings before interest and taxes from its
beverage unit declined 21% last year, as shrinking demand for soft
drinks overwhelmed rising appetite for energy and sports
drinks.
Coca-Cola Amatil produces and distributes the flagship Coke
brand in Australia and four neighboring countries, where it goes
head-to-head with PepsiCo. Inc. in the cola drinks market. It also
distributes the premium spirits portfolio of Beam Global Spirits
& Wines such as Canadian Club whiskey.
Ms. Watkins said the company will be investing heavily in
lower-calorie soda, including Coke Life, a naturally sweetened
drink to be launched to the Australian public in April.
It is also stepping up its focus on bottled water, which it
described as the standout performer last year. It is "a category
Coca-Cola Amatil has only a small share in," the company said.
On Tuesday, Coca-Cola Amatil said underlying profit--which
strips out one-off items--fell 25% in 2014, to 375.5 million
Australian dollars (US$291.8 million). The board cut its final
dividend 31% to A$0.22 a share.
Net profit increased to A$272.1 million, compared with A$79.9
million in 2013, when it took a large impairment charge against its
SPC Ardmona fruit-processing business.
Separately, shareholders Tuesday approved a deal for
Atlanta-based Coke to buy a 29.4% stake in the Indonesian business
of Coca-Cola Amatil, which plans to use the funds on new factories,
warehouses and fridges that house its products in gas stations and
convenience stores.
Coca-Cola Amatil is Coke's sole distributor in Indonesia, the
world's fourth most populous country, where it has profited from
the rise in income growth in recent years. But a weakening local
currency and higher employee salaries have pressured the business.
The vast market has also drawn rivals such as Peru's Aje Group,
known for its Big Cola product, and Japan's Asahi Breweries Ltd.,
which makes carbonated and tea-based drinks.
Write to Rhiannon Hoyle at rhiannon.hoyle@wsj.com
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