Tuesday , October 19 2021

Why the price of the shares of Coca-Cola Amatil Ltd is submerging today


O Coca-Cola Amatil Ltd (ASX: CCL) the stock price dropped almost 10% today after the group warned investors that 2019 would be another "transition" year for investors.

The group that reports on the calendar year also warned investors that the second half of 2018 also saw some problems in their Korean Australian business, with the bottler of soft drinks, juices and mineral water that also operate in New Zealand, Fiji, PNG and Indonesia .

"As expected, FY18 is being affected by our accelerated reinvestment of approximately $ 40 million cost savings in Australia. This funding has supported marketing, execution, cold drinks equipment and digital technology to boost growth initiatives and prices to boost competitiveness,"Commented its CEO, Alison Watkins.

The CEO also warned that "volumes" in Australia in 2018 were also "following a little below 2017," which is a bad sign considering the increased investment that the business is doing when trying to grow volumes.

The group has tried to diversify and innovate products in recent times, but its key product remains the Coca-Cola soft drink that is losing popularity with more health-conscious consumers who want to avoid the high sugar content found in drinks.

This is potentially a structural problem for the group, depending on their point of view and a probable reason why the price of the shares fell by 24% in the last 5 years.

The warning for another soft year in 2019 will not help the patience of investors, after Mrs. Watkins suggested investing more $ 10 million in the Australian business "to increase our sales force in the state's intermediate consumption channel."

The CEO stated that the group remained committed to its medium-term growth objective for medium-term earnings per share, but the stock price drops indicate investors doubt the group to be able to meet their goals.

In fact, for the first half of 2018, both the underlying EBIT and the underlying benefit were in the opposite direction in the delivery of half-digit reductions.

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The collaborator of Motley Fool Yulia Mosaleva has no position in any of the actions mentioned. The Motley Fool Australia recommended to Coca-Cola Amatil Limited. Nor do faithful do not have all the same opinions, but we all believe that considering a diversity of ideas, it makes us the best investors. Motley Fool has a disclosure policy. This article only contains general investment tips (under AFSL 400691). Authorized by Scott Phillips.

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