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the Coca-Cola Amatil Ltd The stock price (ASX: CCL) fell nearly 10% today, after the group warned investors that 2019 would be another year of "transition" for investors.
The group that presents its accounts by calendar year has also warned investors that the second half of 2018 had also experienced some problems for its main business in Australia, with the bottler of soft drinks, fruit juices and drinks. mineral water also in New Zealand, Fiji, PNG and Indonesia.
"As anticipated, our accelerated reinvestment of approximately $ 40 million in cost savings in Australia impacted our fiscal year 18. This funding supported the commercialization, implementation, equipment for cold beverages and digital technology to stimulate growth initiatives and the costs necessary to enhance competitiveness,Commented its CEO Alison Watkins.
The CEO also warned that the "volumes" in Australia in 2018 were also "slightly lower than those of 2017", which is a bad sign considering the increased investment made by the company to try to to grow volumes.
The group has been trying to diversify and innovate products in recent times, but its key product remains the Coca-Cola soft drink, which is losing popularity among more health-conscious consumers who want to avoid the high sugar content in drinks.
This is potentially a structural problem for the group, depending on your point of view, and one of the possible reasons why the stock price is now down about 24% over the past 5 years.
The warning for another tough year in 2019 is not going to help investors to be patient, after Ms Watkins suggested that an additional $ 10 million would be invested in the company Australian "in order to increase our sales force in the middle channel of consumption of the state".
The CEO said the group remains committed in the medium term to its medium-to-single-digit earnings per share growth target, but the fall in share prices suggests that investors doubt that the group will be able to able to achieve its objectives.
In fact, for the first half of 2018, the underlying EBIT and underlying profit went the opposite way with respect to the mid-digit declines.
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Yulia Mosaleva, a contributor to Motley Fool, does not own any of the shares mentioned. Motley Fool Australia has recommended Coca-Cola Amatil Limited. We fools may not all have the same opinion, but we all agree that taking into account a wide range of ideas makes us better investors. Motley Fool has a disclosure policy. This article contains only general investment tips (under AFSL 400691). Authorized by Scott Phillips.
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