Coca-Cola Amatil volumes improved in its major markets in June, reflecting the gradual easing of COVID-19 related restrictions.
It’s trading volumes in June 2020 were down approximately 9% compared to June 2019. Analysts had been expecting a much sharper fall.
The result mean there was a second quarter 2020 volume decline of approximately 23% compared to the prior corresponding period.
Amatil said the rate of improvement has varied greatly across geographic markets, due to differences in the approach, timing and extent of lifting of lockdown restrictions.
“In New Zealand, where significant easing of restrictions has taken place, Amatil’s June 2020 volumes increased approximately 4% on June 2019,” the company said.
In Australia, June 2020 Amatil volumes declined approximately 3% and non-alcoholic ready-to-drink volumes declined 4%).
“As noted at the May trading update, margins, particularly in Australia, have been adversely impacted by changing consumer behaviour due to COVID restrictions,” Amatil said.
“This has led to a significant shift in volume towards Amatil’s grocery channel and away from higher margin on-the-go channels, which have been hardest hit by the restrictions.”
Amatil revealed in May that its alcohol business suffered a 35% decline in volume during COVID-19 shutdown.
The drop in volume reflected on-premise closures and soft Easter and ANZAC Day trading.
Group Managing Director Alison Watkins added: “It is encouraging to see the improvement in our volumes as the pandemic restrictions were lifted across a number of our markets.
“It has also been pleasing to see that the strength of our brands and strong sales capabilities continue to drive market share gains in Australia and New Zealand.
“We nevertheless remain cautious, given the reinstatement of lockdown measures from July in Melbourne.
“The impacts of the pandemic are continuing to evolve with the situation fluid across all of our markets. I am proud of the way the Amatil team has responded to the unprecedented challenges we have faced and am confident that we have a clear path forward, which coupled with our ample liquidity, strong balance sheet and solid credit ratings, positions us well, to emerge from the pandemic as a stronger, better business.”
Citigroup retains its buy rating on Amatil
Citigroup’s head of research, Craig Woolford, said Amatil volumes in June were better than expected, as he had expected volumes to fall 28%. Citigroup expects group volumes to fall 8% in the December half.
“The company has faced a difficult time and volumes are down, but the company has acted decisively and cut costs given the lower demand backdrop,” Woolford said.
Citigroup has retained its buy rating on Amatil.
Amatil will provide a detailed trading update at the first-half results announcement in August.
