Coca-Cola Amatil Ltd's (ASX: CCL) lacklustre run continued into the second half of the 2014 financial year with the beverage manufacturer reporting a 25.3% fall in underlying earnings while sales in its core Australian market also continued to struggle.
However, the outlook provided by management was more than enough to appease investors, who have bid the stock higher in the time since.
The Outlook
Following a string of profit downgrades, the Group's new Managing Director, Ms Alison Watkins, confirmed that the company was targeting a return to profit growth this calendar year for the first time in two years, while it is also targeting mid-single digit earnings per share growth over the next few years. Promisingly, this is consistent with her forecasts provided in an update to the market in October last year.
The Australian and Indonesian markets pose as the biggest issues for the group. While sales and volume growth has slowed in Australia, the company will focus more heavily on marketing and 'better for you' products to strengthen the brand locally with the aim of taking market share back from primary rival Schweppes.
Meanwhile, investors overwhelmingly voted in favour of selling parent entity The Coca-Cola Company a 29.4% stake in the Indonesian division which will see US$500 million invested into the business, thus strengthening its position in the Asian nation.
Should you buy?
Coca-Cola Amatil is by no means out of the woods yet, and investors will punish the stock if earnings fall any further in the near future, but the long-term is certainly looking promising. The stock is currently trading at $10.39 on a forecast 4% dividend yield, making it an appealing prospect for those investors willing to remain patient.
