Shares of Coca-Cola Amatil Ltd (ASX: CCL) fell nearly 2% on Monday after the company updated shareholders on the progress of the company's cost-cutting drive aimed at saving $100 million in operational costs.
Group Managing Director, Alison Watkins said that the strategic review, which has been running since October, was performing better than expected in some areas but that the company would shed 260 "non-frontline positions, with the majority taking effect in 2015." This is in addition to the 157 jobs already shed this year by the company.
Big Changes
The company has made, or is proposing to make the following changes:
- 250mL cans launched to entice more teenage consumers;
- Launch of the #colouryoursummer campaign;
- New product launches and marketing initiatives including the launch of Coke Life in the first half of 2015; and
- The sale of 29.4% of the group's Indonesian business to the US-based Coca-Cola Company for USD 500 million;
Results
Coca-Cola Amatil's management team also commented on the company's two domains; Australia and Indonesia.
Australia is proving difficult, with sustained price competition in the retail and grocery space pushing down profits and margins.
The Indonesian business is reportedly performing well, with "strong volume growth and improvements in market share", however, "pricing and profitability remain under pressure due to the level of competition and ongoing cost pressures". An interesting comment indeed!
Dividends and Growth
If Coca-Cola Amatil are to turn things around then now would have to be close to the low point for the company and share price.
Australian and Indonesian profitably are stretched and many market commentators believe that the group's strong brand awareness will maintain market share in the immediate future.
Long-term investors will be thankful that many analysts are predicting a grossed up yield of well over 6% for this and the following financial years, however earnings growth may be muted while the company wades through the current competitive marketplace.
