Beverages supplier Coca-Cola Amatil (CCA) says markets in Indonesia and Papua New Guinea are its strongest performers, and boosting investments there will be a high priority in 2012.
CCA said on Wednesday that its businesses in Indonesia and Papua New Guinea had generated five consecutive years of very strong growth, boosted by increased manufacturing capability and the distribution of more cold drink coolers.
“The up-weighting of our investment in Indonesia and PNG remains a high priority as the growth outlook for both businesses continues to be favourable,” CCA group managing director Terry Davis said.
The Indonesian economy remained buoyant, with the economy expected to grow by more than six per cent in 2012.
In Indonesia, modern convenience stores were opening at a rate of one every five to six hours in major urban centres.
In the last 12 months, more than 25,000 new cold drink coolers were placed in Indonesia, bringing CCA’s total in that country to 225,000.
In PNG, new LNG (liquefied natural gas) projects were expected to more than double the size of the country’s economy in the next five years.
CCA had opened new manufacturing facilities in PNG and increased the production capability of PET plastic bottles by 100 per cent.
CCA on Wednesday booked an annual net profit of $591.8 million for the 2011 calendar year, up 19 per cent on the prior year.
The result included a $59.8 million gain in significant items.
Net profit before significant items rose five per cent to $532.0 million.
The significant gain of $59.8 million comprised a $170.3 million after-tax profit from the agreement to sell CCA’s 50 per cent share of the Pacific Beverages brewing joint-venture to SABMiller in December 2011, less $110.5 million in restructuring and other costs for the SPC Ardmona food business.
Mr Davis described the group’s underlying profit result in 2011 as “solid” given a challenging trading environment marked by natural disasters, low consumer confidence, the high Australian dollar and a cool summer.
But he said CCA’s overall business could be characterised as staple (staple) rather than discretionary and the group did not experience large swings in volumes and earnings like some other companies.
CCA’s result was underpinned by CCA’s continued investment in manufacturing and improved customer service levels.
“We’ve been one of the very few manufacturers in this country that has materially invested in our manufacturing, in our distribution and our group-wide technology platforms,” Mr Davis said.
CCA’s Australian business was expected to deliver volume and revenue growth in 2012.
“While the weak consumer spending environment in Australia and New Zealand remains a concern, and the persistent poor weather in NSW and Queensland has dampened summer trading, we have a solid promotional program in the lead-up to the Olympics, with Coca-Cola a key sponsor, and we are cycling the impacts of natural disasters and poor weather in 2011,” Mr Davis said.
Morningstar analyst Adrian Atkins said CCA’s underlying profit was in line with the company’s guidance and market expectations.
“The result reconfirms our high opinion of CCA as a well-managed bottler with defensive, growing earnings,” Mr Atkins said.
“Indonesia was a bright spot with EBIT (earnings before interest and tax) jumping 17 per cent.”
Shares in CCA were four cents lower at $12.07 at 1416 AEDT on Wednesday.
