Shares in Coca-Cola Amatil Ltd (ASX: CCL) have tumbled further today, dropping 38 cents or 4% to just $9.16 late in the session. They have now fallen 6% since peaking at $9.74 on Tuesday. This the result of a disappointing half-year results presentation, which was covered in greater depth in this article.e
The market had largely been expecting the 15.6% fall in profit. The company warned in April that its profit for the half would be significantly below that of 1H13 due to tough conditions and a continued price war with primary rival Schweppes.
Instead, it is more likely that the company's outlook has resulted in a significant sell-off today. Coca-Cola Amatil's new Managing Director, Ms Alison Watkins, warned that the tough conditions would linger over the business for the remainder of the year, while profits for the full-year would be "materially below" those recorded in 2013.
In addition to the reasons mentioned above, Coca-Cola Amatil is also struggling with subdued consumer confidence, a poor start to the year in the New Zealand market and inflationary pressures in Indonesia, which has for a long time been flagged as a growth region for the company.
Should you buy Coca-Cola Amatil?
I'm not going to start making any predictions of how the share price will behave over the coming weeks or months. While I (as a shareholder) would like to think the headwinds facing the company are already well and truly priced into the shares, they could just as likely tumble further in the near-term.
On the other hand however, I also remain hopeful the shares will rebound at some stage in the coming months. A strategic review being implemented by Watkins could result in annual cost savings of $100 million or more, which could then lead to price reductions or a strengthened brand portfolio.
Despite yesterday's result, I am not even slightly tempted to sell my Coca-Cola Amatil shares and will even consider adding to my stake in the near future. If you're a long-term investor wanting to find a quality business trading at a very reasonable price, you should consider doing the same.
