COCA-COLA AMATIL LIMITED (CCL)

Business Description:
Coca-Cola Amatil Limited (CCL) manufactures and distributes carbonated soft drinks, water, sports and energy drinks, fruit juice, flavoured milk, coffee and packaged ready-to-eat fruit and vegetable products. CCL is the principal Coca-Cola licensee in Australia and independently manufactures its own soft drinks and mineral waters. CCL sells and distributes the premium spirits portfolio of Beam Global Spirits & Wines. CCL also operates in New Zealand, Fiji, Indonesia and Papua New Guinea.

Strategy Analysis:
CCL's key strategy is to grow the Australian beverages market by finding new outlets and to improve returns in the core business. At the same time it is investing heavily to increase fridges in Indonesia where strong GDP growth coupled with a large population and low penetration suggest good long-term growth potential. The alcoholic beverages business is another attractive growth avenue with CCL able to leverage its sales and distribution infrastructure to maximum effect. The Project Zero cost reduction program is a key contributor to profit growth in mature core markets. Value adding projects have been identified through to 2015. Acquisitions have played a part in diversifying to become a broader based beverage company. Neverfail was acquired for $225m in April 2003 and SPC Ardmona was acquired for $524m, diversifying into packaged fruit, in early 2005. The Pacific Beverages distribution joint venture with SABMiller was formed in 2006 to distribute alcoholic beverages and sold late 2011. The Korean business was sold in 2007. Coca-Cola Amatil reported NPAT down 22.3% to $459.9m for the year ended 31 December 2012. Revenues from ordinary activities were $5.18bn, up 6.3% from last year. Basic and Diluted EPS was 60.4 cents compared to 78.1 cents last year. Net operating cash flow was $741.9m compared to $641.8m last year. The final dividend declared was 32.0 cents, taking the full year dividend to 59.5 cents compared with 52.5 cents last year. The Australian business delivered solid volume and EBIT growth of 3.3% against a backdrop of weak consumer spending and very poor weather in the first quarter. The Australian business expects to again deliver revenue and earnings growth in 2013. In addition, the company believes productivity and efficiency gains from the Project Zero investment program will make a good contribution to earnings growth.