Virus hits Coca-cola Amatil

AGM told of good signs despite sales cut by a third

COCA-COLA Amatil says the COVID-19 lockdown restrictions have cut sales by a third across its major markets since April.

But with the lockdowns easing, there are “signs of some good shoots” emerging, group managing director Alison Watkins told the company’s annual meeting on yesterday.

Trading in the first three weeks of May saw a modest improvement on April, with volume declining by about 26 per cent compared with a year ago. “Within the context of these challenging conditions it has been a testament to the strength of our brands that we have been able to outperform the broader beverages sector and achieve market share gains in Australia, New Zealand and Indonesia,” Ms Watkins said.

Grocery stores have been Coca-coca Amatil’s dominant channel during the lockdown period but sales were down 10 per cent as stressed supermarkets cancelled promotional activity during the traditional peak Easter and Anzac Day trading periods.

“The supermarkets needed to make some rapid adjustments because they were struggling with their supply chains, with other staple items particularly,” Ms Watkins told analysts on a conference call.

“It has been a very choppy few weeks.”

Non-supermarket sales were down 55 per cent as convenience and petrol station sales fell 20 per cent with people staying home.

Alcohol sales were down 35 per cent compared with a year ago, with pubs and restaurants closed and holiday trading light.

Coca-cola Amatil said it was adjusting to the new environment by cutting its capital expenditure by a third, to $200 million, its marketing budget by $20 million and its overhead by at least $120 million.

Ms Watkins said that with $920 million in cash and $500 million in undrawn bank facilities available, Coca-cola Amatil had sufficient liquidity to service its debt that was maturing in 2020.

The company had $1.8 billion in debt as of March 31, with an average maturity of 5.4 years.

“We are comfortable that our financial position provides us with the flexibility needed to navigate this uncertain environment,” Ms Watkins said.

Moody’s reaffirmed Amatil’s A3 credit rating and stable outlook on April 23, Ms Watkins said.

At 2.27pm yesterday, CocaCola Amatil shares were down 2.0 per cent to $8.785.