Coca-Cola Amatil marks turnaround with first revenue growth in seven years

With sales sweetened by its No Sugar brand, Coca-Cola Amatil is celebrating its first revenue growth in seven years.

Coca-Cola Amatil CEO Alison Watkins. Picture: Adam Yip

Coca-Cola Amatil has trumpeted the completion of a two-year transition for the beverages group following years of shrinking earnings from its Australian drinks arm, with its local business hitting revenue growth for the first time in seven years and volumes lifting.

The beverages group on Thursday declared a 6.7 per cent lift in revenue to $5.07 billion for the 2019 calendar year as earnings before interest and tax rose 0.8 per cent to $639.3 million and net profit gained 34.2 per cent to $374.4m.

For long suffering Coca-Cola Amatil shareholders who have suffered years of underperformance, chief executive Alison Watkins has almost hit her long-held promise of returning the bottler to growth by 2020.

At the company’s investor day in November Ms Watkins confirmed her belief that 2019 would mark the completion of a two-year transition period for Coca-Cola Amatil, with the ­bottler envisaging higher profit growth in the second half of 2020 than the first half.

Those promises look to have finally come true with the flagship beverages arm, which drives more than two-thirds of earnings, growing sales for the first time in seven years, with volumes up, while its volatile business in Indonesia is also back in growth mode.

The company has declared a final dividend of 26 cents per share for 2019, flat with 2018, payable on April 15.

Ms Watkins is sticking by her target of 2020 being a solid profit growth year for the bottler.

“We expect to deliver mid-single digit earnings per share growth in 2020 and over the medium term. Our plans envisage higher earnings growth in the second half of 2020 than the first half.”

But she added the company remains “on watch” for flow-on effects on the economy of the bushfires in Australia and coronavirus.

Ms Watkins said the Australian beverages business had delivered a pleasing result, with revenue and volume growth for the year led by another excellent performance by Coca-Cola No Sugar. Volume growth was 0.9 per cent for the year despite the negative impact on volumes from the Queensland container deposit scheme. Excluding Queensland, total volumes increased by 1.5 per cent.

“The continued volume growth in Coca-Cola No Sugar is a testament to consumer enthusiasm for healthier options, and a sign of the strength of our portfolio,” Ms Watkins said.

“We’ve heard the message on consumer wellbeing, and we’re delivering with reductions in sugar content across the portfolio of sales.”

Earnings for the Australian division fell 1.9 per cent to $369m.

Underlying volumes in water were solid, despite the cessation of sales for the low value/margin Peats Ridge brand in Officeworks, and some further rate realisation in grocery, she said.

Ms Watkins said energy and dairy performed well, driven by the continued popularity of Monster and Nutriboost.

The New Zealand and Fiji, Indonesia and Papua New Guinea and alcohol and coffee businesses all performed well.

“This result demonstrates encouraging progress as we mark the completion of our two-year transition period,” Ms Watkins said.

Earnings at Coca-Cola Amatil’s New Zealand and Fiji arm rose 10.1 per cent to $123.8m while Indonesia and PNG earnings lifted 14.3 per cent to $97.3m. Its alcohol and coffee operations booked an earnings rise of 12.7 per cent to $62.8m.