Coca-Cola Amatil Ltd (ASX: CCL) has released its earnings results for the first-half of the 2016 calendar year, reporting a lift in profit attributable to shareholders of almost 8%.

Although trading revenue rose a mere 2.8% compared to the prior corresponding period, net profit after tax (NPAT) lifted 7.8% to $198.2 million. Earnings per share (EPS) for the period also rose 7.8% to 26 cents, while the group declared a 21 cent dividend per share, franked to 75%.

The Results

On an operational level, Coca-Cola Amatil’s Indonesia & Papua New Guinea (PNG) division provided plenty of growth. Earnings (before interest and taxes, or EBIT) rose 65.2% from that segment to $37 million, up from $22.4 million for the prior corresponding period.

Meanwhile, the Alcohol and Coffee Beverages division also lifted 33.6% to $19.5 million. New Zealand and Fiji earnings grew 5.4% to $46.7 million.

Indeed, these results are encouraging for shareholders, but the group’s biggest operational division – non-alcoholic beverages in Australia – remains flat. In fact, EBIT actually declined 1.9% to $218 million. Given that this division accounted for just over a third of the group’s overall operational earnings, group EBIT rose a mere 3.2% for the period.

This is likely one of the reasons why investors sold the shares down immediately after the results were released. They’re down 2.8% at the time of writing at $9.32. Pleasingly for investors, the shares are still trading significantly higher than they were just two months ago – they have risen more than 17% during that time.

Australia

Management said a decline in revenue in the Australian division was driven by a 1.5% reduction in volumes sold, together with a 2.2% lower revenue per unit case. This is likely due to a combination of competitive forces – for example, from Schweppes which bottles Pepsi products in Australia –  as well as changing consumer health trends, which investors need to be mindful of moving forward.

What’s more, Coles – owned by Wesfarmers Ltd (ASX: WES) – as well as Woolworths Limited (ASX: WOW) have significant pricing power which may have also impacted prices on Coca-Cola Amatil’s products.

Indonesia & PNG

Pleasingly, volumes did grow strongly in the Indonesia and PNG region, increasing 14.2% to 120.7 million unit cases. Notably, however, this may have also been impacted positively by the timing of the Ramadan festive period being 10 days earlier this year, while a weak currency is still having a negative effect on input costs.

Outlook

Although management said it is pleased with the progress it has made in regards to the strategic review announced late in 2014, it recognises there are still a number of issues that need to be addressed.

Management continues to target mid-single digit earnings per share growth over the coming years, which solidifies the view that this shouldn’t be viewed as a business with enormous growth potential.

In regards to its Australian operations, it suggested indicators to support a “cautious optimism” in relation to stabilising earnings and returning to growth, while it is also aware of concerns related to the uncertainty and volatility of the Indonesian market. Although it remains a key growth region, it is no certainty to succeed and investors may want to approach the shares accordingly.

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Motley Fool contributor Ryan Newman has no position in any stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.