The Coca-Cola Amatil Ltd (ASX: CCL) share price is one to watch today after the company announced updated earnings guidance this morning.
Why is the Coca-Cola Amatil share price on watch?
The Aussie bottling group provided an initial, unaudited trading update for Q4 2020 and the full year ended 31 December 2020 (FY20). Coca-Cola is expecting to deliver FY20 ongoing earnings before interest and tax (EBIT) before non-trading items down 13.9% on FY19 to $550.7 million.
Group managing director Alison Watkins said the group saw “strong trading performance” in the Q4 2020 Christmas period. That was especially the case in the Australian grocery channel with broader strong performance in New Zealand.
“Month to month volatility” is expected to persist, particularly in Australia. Ms Watkins cited variability in trading conditions from state to state under coronavirus restrictions as a key factor.
Coca-Cola’s Indonesian business is facing “challenging” trading conditions. That comes as the country continues to battle COVID-19 outbreaks and difficult macroeconomic conditions. Indonesian volumes fell 18.7% for the quarter thanks to lower consumer mobility and economic activity.
It will be interesting to see how the Coca-Cola Amatil share price performs this morning following this latest earnings update. Coca-Cola saw FY20 group volumes fall 5.4% lower for the quarter and 8.4% for the year. Low FY20 volumes impacted on group revenue which fell 6.1% to $4,762.1 million.
The group EBIT result of $550.4 million includes an expected $140 million of cost savings due to efficiency gains announced at the start of COVID-19. There was also the Q4 2020 uplift as Victorian restrictions eased and business activity resumed late in the year.
In Australia, grocery (+5.0%) and convenience & petroleum (+6.7%) saw strong growth throughout FY2020 despite on-the-go volumes falling 8.3% for the year.
Foolish takeaway
The Coca-Cola Amatil share price is one to watch in early trade after the company updated its guidance for Q4 2020 and FY2020. Shares in the Aussie bottling company are up 7.9% in the last 12 months compared to a 4.3% drop in the S&P/ASX 200 Index (ASX: XJO).
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More reading
- The ASX 200 stock facing a day of reckoning at the February reporting season
- Citi sees bigger takeover offer coming for Coca-Cola Amatil (ASX:CCL) share price
Motley Fool contributor Ken Hall has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.
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