Shares of the embattled beverage giant Coca-Cola Amatil Ltd (ASX: CCL) have been hammered again today, trading 28 cents or 3.1% lower at $8.82 per unit. The fall comes after the company released an update regarding its operations yesterday, in which it revealed 260 employees would be shed as part of its overall cost-cutting drive.
So What: When the company last updated the market on the results of its strategic review, the results were well received with the company outlining plans to cut up to $100 million in annual costs and to drive growth in Indonesia and Australia.
While the Indonesian business (which has long been touted as the company's enormous growth prospect) has reportedly experienced strong volume growth and improvements in market share, it also reported that "pricing and profitability remain under pressure due to the level of competition and ongoing cost pressures".
Investors may have been further disappointed by the continuation of "challenging" conditions in the Australian market. Ms Alison Watkins, the company's Managing Director, admitted that "we have not yet seen the anticipated improvements in the grocery channel and operational accounts". She did add that a better performance is expected in the second half, but investors may have chosen not to get their hopes up.
Now What: Admittedly, it is tough playing the waiting game with Coca-Cola Amatil. As a shareholder myself, the company's slow turnaround has certainly tested my patience.
However, I am still a firm believer in the company's long-term potential. While its recovery might take a while, Coca-Cola Amatil still boasts a network of some of the world's most recognisable and popular brands which I believe will prevail in the long term. With a strong balance sheet, Coca-Cola Amatil should be able to maintain strong dividend payments (particularly with the company still forecasting a return to earnings growth in the near future), which will make the wait more bearable.
As attractive as Coca-Cola Amatil is at these prices, there's a stock that our top analyst, Scott Phillips, believes is an even greater buy in 2015…
