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Coca-Cola Amatil share price hits multi-year high after solid FY 2019 result

The Coca-Cola Amatil Ltd (ASX: CCL) share price is pushing higher in morning trade following the release of its full year results.

At the time of writing the beverage company’s shares are up 2% to a multi-year high of $12.31.

How did Coca-Cola Amatil perform in FY 2019?

For the 12 months ended December 31, Coca Cola Amatil reported a 6.5% increase in total revenue from continuing operations of $5,112.1 million. Management advised that this reflects the results of strategic initiatives across the group.

On a statutory basis, net profit after tax (NPAT) came in 34.2% higher than the prior corresponding period at $374.4 million. Whereas net profit after tax from continuing operations grew at the more modest rate of 1.4% to $393.9 million. Ongoing earnings per share came in at 54.4 cents, which was an increase of 1.5%.

The company recorded a strong cash flow result. Ongoing free cashflow before lease accounting changes lifted by $70.8 million on the prior year.

This allowed the company to maintain its final dividend of 26 cents per share unfranked. This brings its full year dividend to 51 cents per share, representing a full year ongoing payout ratio of 86.4% (excluding its 4 cents per share interim special dividend).

Segment performance.

The Australian Beverages segment achieved revenue growth for the first time in seven years. This was thanks to volume growth of 0.9% for the year, despite the negative impact on volumes from the Queensland container deposit scheme. Excluding Queensland, total volumes increased by 1.5%.

Managing director, Alison Watkins, revealed that healthier options drove the solid performance. She said: “The continued volume growth in Coca-Cola No Sugar is a testament to consumer enthusiasm for healthier options, and a sign of the strength of our portfolio.”

Volume sales were also boosted by additional volumes in Hungry Jacks and McDonalds, as well as customer wins in Pizza Hut. The pizza chain switched to the Coca-Cola range in 2019 for the first time in its 40-year history in Australia. Segment EBIT fell 1.9% over the period.

The New Zealand & Fiji business was a positive performer. It continued the strong momentum from previous years and delivered a 10.1% increase in EBIT.

The Indonesia & Papua New Guinea segment delivered double-digit revenue and volume growth and 14.3% EBIT growth in FY 2019. Management explained that Indonesia achieved strong revenue and volume growth from excellent execution and investments in marketing. Whereas PNG delivered strong double-digit revenue, volume and EBIT growth following the rectification of previous operational issues.

Finally, the Alcohol & Coffee business continued its strong form and recorded another year of double-digit EBIT growth.

Outlook.

Ms Watkins believes that the company is well-positioned for growth following the completion of its two-year transition period.

She explained: “We expect to deliver mid-single digit earnings per share growth in 2020 and over the medium term. Our plans envisage higher earnings growth in the second half of 2020 than the first half.”

Though, the managing director warned that the company remains “on watch for flow-on effects on the economy of the bushfires in Australia and coronavirus.”

Group capex is expected to be approximately $300 million in 2020. It also expects a dividend payout ratio of over 80% over the medium term, with franking returning to above 50% in 2021.

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Motley Fool contributor James Mickleboro has no position in any of the 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 Scott Phillips.

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