Coca-Cola Amatil scraps earnings forecasts

Coca-Cola Amatil’s long-promised plans to return to earnings growth have been trashed by the coronavirus pandemic.

Coca-Cola Amatil CEO Alison Watkins says the company expects to continue to operate while maintaining its workforce. Picture: Ryan Osland

Coca-Cola Amatil is in talks with the securities regulator to devise an online alternative staging of its annual general meeting slated for May, as a crackdown on large public gatherings to combat the coronavirus pandemic forces the company to consider actively discouraging investors turning up to question directors face-to-face and vote on resolutions.

Chief executive Alison Watkins told The Australian on Tuesday that CC Amatil had kickstarted discussions with the Australian Securities and Investments Commission over how to safely hold an AGM in the era of a pandemic with a small physical and online meeting one suggestion.

It comes as Ms Watkins was forced to withdraw the bottler’s guidance provided at its full-year guidance result in only last month of single digit earnings per share growth in 2020, with the seasoned company director and CEO providing a chilling warning that the economic impact of rising unemployment and business closures flowing from government directives could last for years after the coronavirus pandemic subsides.

“The actions that we take are going to have some pretty significant economic consequences, and we are not just going to bounce back,’’ Ms Watkins said, as CC Amatil binned its single digit earnings per share growth target for the year ahead. Economic and social dislocations mean many consumers won’t be reaching for a Coke or bottled water given the cancellation of sports and music events to the melting away of tourism.

“I think we need to be realistic about that, so things aren't going to return to normal just because COVID-19 is behind us. We are going to live with the economic consequences for quite some time, I would suggest it will be years not months.’’

But there are also practical corporate issues to deal with, and CC Amatil is set to hold its AGM on May 26 but that could be thrown into turmoil as governments move to limit public gatherings.

“We are working ASIC there to understand how we might stage a virtual AGM and at the moment we are planning to have that kind of virtual and physical AGM available as two alternatives to make sure that shareholders who want to join us can do so.

“There will still be a physical meeting, is my understanding … and we may need to discourage people from actually coming to the physical meeting because it would be typically a large gathering.’’

Turning to the business, she said in the medium term it was being shaken by the government actions to clamp down on the pandemic.

“We noted at that time that we remained on watch for flow-on effects on the economy of the bushfires in Australia and coronavirus. Since then we have seen a significant escalation of measures taken by governments in each of our markets in an effort to slow the rate of COVID-19 infection. These are having and will have a myriad of consequences for our customers and our businesses.”

CC Amatil said given the significant uncertainty in relation to the duration and impact of the COVID-19 pandemic, the bottler said it no longer felt it is appropriate to continue to provide earnings guidance.

Ms Watkins said there was uncertainty around its Indonesian business in the lead up to Ramadan, while in Bali the drying up of tourism had dented its sales in that once thriving tourism hotspot.

However, In Australia and New Zealand CC Amatil is seeing strong growth in the grocery channel as consumers stock up on beverages such as Coke, bottled water and possibly Canadian Club whiskey.

But this was being offset by a downturn in the “on the go” channel such as restaurants, cafes, regional shops, cinemas, hotels, airlines and fast-food chains.