Coca-Cola Amatil Ltd. (CCL.AU) Managing Director Terry Davis said Thursday that he expects the economy to deteriorate further before improving as forecasts are calling for unemployment to rise in Australia.

Speaking at an American Chamber of Commerce in Australia luncheon, he said consumer sentiment is still fragile, but that the first half of the company's fiscal year ending June 30 benefited from a hot summer and shopping that was fueled by consumer stimulus checks.

The second half could be more difficult for the company, depending on factors like weather and unemployment, he said, adding growth won't likely be as high as it was in the first half. Davis reiterated guidance of delivering high single-digit profit growth for the first half of the year.

Davis was critical of the government's plan to tax employee share schemes, saying such programs are beneficial for productivity and shouldn't be discouraged.

"There's no question in my mind that when an employee has skin in the game, it brings a tangible result," he said. "I hope common sense will prevail."

Addressing speculation that the beverage company might consider buying Fosters Group Ltd., Davis said there's no compatibility for a wine business in Amatil's operations.

-By Cynthia Koons, Dow Jones Newswires; 61-2-8272-4691; cynthia.koons@dowjones.com
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