Beverages supplier Coca-Cola Amatil (CCA) expects annual earnings for the calendar year will be lower than last year partly because a post-election lift in consumer spending has not materialised.
More aggressive competition in Australia and the weaker Indonesian rupiah and PNG kina were also dragging back earnings.
“CCA expects 2013 full year group EBIT (earnings before interest and tax) to be within a range of a five per cent to seven per cent decline on last year, before significant items,” the company said in a statement on Monday.
The trading performance over the next eight weeks would be important because the Australian beverage business represented about 70 per cent of group earnings and generated about two-thirds of second-half earnings in November and December.
Shares in CCA were 54 cents, or 4.19 per cent, lower at $12.35 at 1039 AEDT.
CCA said although volumes and market share in the Australian beverage business had improved in the third quarter, trading so far in the fourth quarter had not shown the expected uplift in consumer spending after the federal election in Australia.
Sales volumes in outlets other than grocery stores had continued to grow in the second half, but consumer demand was more subdued than expected.
Sales of carbonated drinks in Australian supermarkets had returned to growth but aggressive pricing by competitors had limited gains so far in the second half.
Business in New Zealand was improving as overall market conditions there had picked up.
But higher inflation had affected consumer spending in Indonesia, consequently slowing third quarter demand.
Nonetheless, the Indonesian business was expected to generate volume and earnings growth in the low double digits in terms of percentage.
In PNG, demand was still soft as the PNG economy felt the impact of reduced mining activity and investment.
CCA’s alcohol, food and services division was trading in line with expectations.
The SPC Ardmona packaged fruit and vegetables business still expects lower earnings in 2013 but it had secured commitment from major customers to use more Australian-grown produce.
CCA said it was ready to re-enter the Australian beer and cider market in just over a month and had entered into an agreement to distribute America’s largest selling craft beer, Samuel Adams, in Australia from mid-December.
CCA expects its alcoholic beverages business will generate one to two per cent on incremental group earnings growth in 2014.