Shares in Australian soft-drink manufacturer Coca-Cola Amatil Ltd. recouped some losses recently, but analysts warned the stock could face further short-term weakness on earnings uncertainty.
C-C Ama…
Shares in Australian soft-drink manufacturer Coca-Cola Amatil Ltd. recouped some losses recently, but analysts warned the stock could face further short-term weakness on earnings uncertainty. C-C Amatil shares were four cents stronger at A$ 3.88 in early afternoon trade after falling to a six-year closing low of A$ 3.84, continuing their decline from levels above A$ 7.50 in May last year. However the bottler, which issued a profit warning in December, was unlikely to post any real improvement until its Philippines operation picked up, expected towards the end of the year, analysts said. A statement clarifying its use of market incentive payments in Korea had no impact on the current outlook for the stock. “The announcement is not too different to what we had originally. I have a hold on the stock but I expect weakness, potentially down to A$3.50,” said one analyst. The balance of risks was currently on the downside, although the anyalyst anticipated an improvement from the Philippines in the second half of 2000. C-C Amatil Ltd. said it had used all of the A$ 91 million available in Korean market development incentive payments from The Coca-Cola Co. in 1998 and 1999. The payments could have been extended into the current year. The lack of such payments was part of the reason for the company“s warning in December that it faced a lower profit in calendar 2000, along with poor performance in the Philippines. “We maintain it as a hold, but expect it to underperform for a while,” added a dealer at a European-owned investment bank. “The real story is in the Philippines. We expect that will get better down the track.” The Philippines was C-C Amatil“s biggest market in 1998, contributing A$ 169.6 million at the pre-tax operating level, but this fell to A$ 57.9 million in the first half of 1999. The company also set a A$ 70 million restructure of its Philippine operations in December, which would also help offset problems flowing from the country“s subdued economy. C-C Amatil said on 9 December its calendar 1999 net profit before abnormals would be above 1998“s A$ 179.3 million, but said its 2000 profit would be lower than in 1999, citing the completion of market development incentive payments in South Korea and lower than expected performance in the Philippines. Analysts are forecasting a calendar 1999 pre-abnormal net profit of A$ 186.8 million with a range of A$ 179.3 million to A$ 200.3 million. Profit for 2000 is forecast at between A$ 158.7 million and A$ 237.4 million. C-C Amatil is about 37% owned by The Coca-Cola Co. Manila conglomerate San Miguel Corp. is the second largest shareholder with 21.5%, retaining its stake in September last year when it rejected bids of only A$ 5 per share for C-C Amatil shareholders.