In morning trade the Coca-Cola Amatil Ltd (ASX: CCL) share price is sinking lower.
At the time of writing the beverage giant’s shares are down 5% to $9.50.
Why is the Coca-Cola Amatil share price down 5%?
This morning Coca-Cola Amatil became the latest company to withdraw its guidance for FY 2020. This follows Cochlear Limited (ASX: COH) withdrawing its guidance for FY 2020 on Monday and countless others before it.
Just under four weeks ago, the company released its full year results and provided guidance for mid-single digit earnings per share growth in FY 2020 and the medium term. Though, management did warn that it was watching for flow-on effects on the economy from the bushfires and the coronavirus outbreak.
Since then the company has seen a significant escalation of measures taken by governments in each of its markets in an effort to slow the spread of the virus. Management notes that these measures are having and will have a myriad of consequences for its customers and its businesses.
In light of the significant uncertainty in relation to the duration and impact of the COVID-19 pandemic, the company no longer feels it is appropriate to continue to provide earnings guidance. Especially given how it is nearing the important Easter and Ramadan festive trading periods.
The company’s managing director, Alison Watkins, advised: “As the situation continues to unfold, Amatil’s overriding priority is the safety and wellbeing of our people. We will continue to support our customers and our local communities, and at this stage we expect we can continue to operate our business and avoid significant supply chain disruption, while maintaining our workforce during this challenging time.”
Coca Cola Amatil also provided an update on current trading conditions so investors could see what it is dealing with.
In Australia and New Zealand the company is seeing strong growth in the Grocery Channel as consumers stock up (panic buy) from Coles Group Ltd (ASX: COL) and Woolworths Group Ltd (ASX: WOW) supermarkets.
However, the growth in the Grocery Channel has been offset by declines in On-The-Go (OTG) channels which have been soft following the bushfires in January.
Management advised that it expects the OTG weakness to accelerate given how consumers are likely to be staying at home and due to the widespread cancellation of major sporting, entertainment, and cultural events.
And finally, in Indonesia it is seeing a reduction in foot traffic as people stay home, with Bali volumes impacted by the severe decline in tourism.
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James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of Cochlear Ltd. The Motley Fool Australia has recommended Cochlear Ltd. 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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