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  • Coca-Cola Amatil share price sinks lower after bleak trading update

    Coca-Cola image

    In morning trade the Coca-Cola Amatil Ltd (ASX: CCL) share price is trading lower on the day of its annual general meeting.

    In early trade the beverage company’s shares fell 4% to $8.61.

    What did Coca-Cola Amatil announce at its annual general meeting?

    As well as releasing its traditional presentation with speeches and a breakdown of its performance over the last 12 months, it also released a trading update.

    According to the update, Coca-Cola Amatil has been battling some particularly tough trading conditions during the pandemic.

    Last month the company warned investors that conditions were difficult, this morning management revealed the full extent of the “unprecedented disruption” it has faced.

    In Australia the company experienced a ~30% decline in volume of its non-alcoholic ready to drink category during April compared to the prior corresponding period. This decline reflects lockdown restrictions impacting on the go (OTG) volumes and also changes in buying patterns in the grocery channel.

    During April, Australian OTG volume was down 55% on the prior corresponding period and grocery channel volume fell 10%. The latter was driven by retailers reducing their inventory levels and cancelling promotional activities during the traditionally peak Easter and ANZAC Day trading periods.

    The Australian alcohol business was also out of form. It posted a 35% decline in volume due to on-premise closures and softer Easter trading.

    Things weren’t any better for its New Zealand or Indonesia businesses. Both posted sharp declines in volume during April due to the negative impacts of the pandemic.

    Combined, total volume across the company during April declined by approximately 33% compared to the same period last year.

    Another disappointment is that the shift in channel mix for its sales means that its margins have narrowed during the pandemic, putting extra pressure on its profits.

    What now?

    With lockdown restrictions starting to ease, the company notes that its volumes have started to recover slightly.

    During the first three weeks of May, Coca-Cola Amatil’s overall volumes were down 26% on the prior corresponding period.

    However, Managing Director Alison Watkins warned that conditions could remain tough for a little while to come.

    She commented: “Looking ahead, whilst it is encouraging to see lockdown restrictions gradually being eased and some green shoots of improvement in trading conditions emerge, the reality is that economic recovery will take time and uncertainty remains. We anticipate we will have a clearer view that we can share with the market at our 2020 half year results in August.”

    Nevertheless, Ms Watkins remains optimistic on the longer term.

    “We have a clear path forward to weather the current conditions, noting that the fourth quarter trading conditions will be imperative to our FY2020 financial performance. We are confident that our strong balance sheet, ample liquidity, robust cashflows and solid credit ratings place us in a strong position financially and operationally to trade through this period and emerge a stronger and better business,” she concluded.

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    Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

    The post Coca-Cola Amatil share price sinks lower after bleak trading update appeared first on Motley Fool Australia.

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  • Is the ANZ share price a buy?

    ANZ Bank

    Is the Australia and New Zealand Banking Group (ASX: ANZ) share price a buy? The ANZ share price is drifting lower when most other ASX shares are rising.

    At the pre-open price, ANZ is actually 8% lower than it was at the start of May 2020.

    The major ASX bank recently reported its result on 30 April 2020. Within that result statutory profit declined by 51% to $1.54 billion and cash profit fell 60% to $1.4 billion.

    Obviously the ongoing coronavirus impacts are a big reason why the bank profit fell so hard. The result included impairment charges of $1.674 billion that included increased credit reserves for COVID-19 impacts of $1.031 billion.

    And what about the all-important dividend? It was deferred to a later date. Who knows if that means it will be paid or cancelled altogether? It depends how tough things are going to get. ANZ certainly followed APRA’s dividend guidance. 

    How tough will things get for the ANZ share price?

    It’s hard to say right now. The ANZ share price is already down 43%, how much worse could it get?

    With the jobkeeper package being overestimated, perhaps the economy won’t be as hit as hard as first thought. Maybe the share price sell-off is overdone if Australia’s economy is only modestly affected by what’s going on.

    But what’s certain is that the official Australian interest rate is now extremely low. This definitely makes it harder for ANZ to make solid profit. It will hurt the net interest margin (NIM). It’s not like ANZ can start charging interest for transaction accounts.  

    There’s going to be pain this year, it’s why the ANZ share price is down so much. The question is how quick the economy will recover. We just don’t know. There’s a chance ANZ’s share price could be this low for some time.

    I’d rather buy shares where the potential outcomes aren’t as negative, long lasting and wide ranging as ANZ.

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    Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

    The post Is the ANZ share price a buy? appeared first on Motley Fool Australia.

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  • Japan’s Hottest Stock Is Tiny Maker of $40 Million Chip Machines

    Japan’s Hottest Stock Is Tiny Maker of $40 Million Chip Machines(Bloomberg) — The list of Intel Corp.’s annual supplier award winners tends to read like a who’s-who of the semiconductor industry’s biggest names. This year, it included a little-known Japanese company whose machines have become indispensable in the race to improve semiconductors and whose stock has been rocketing up as a result.Lasertec Corp. is the world’s only maker of testing machines required to verify chip designs for the nascent extreme ultraviolet lithography (or EUV) method of chipmaking. In 2017, Lasertec solved a key piece of the EUV puzzle when it created a machine that can inspect blank EUV masks for internal flaws. Last September, it cleared another milestone by unveiling equipment that can do the same for stencils with chip designs already printed on them. This March, Intel gave the tiny Yokohama-based company an award for innovation, its first after decades of doing business together.“That’s a major milestone for us,” Lasertec President Osamu Okabayashi said in an interview. “It means a lot to be recognized this way as a supplier.”The company’s stock has soared more than 520% since the start of 2019, more than twice the gain of the second-best-performing security in the benchmark Topix index. That includes an increase of more than 50% this year.Intel declined to say if it was buying EUV equipment from Lasertec, which already supplies test gear to its rivals Samsung Electronics Co. and Taiwan Semiconductor Manufacturing Co. The three chip fabricators are the only ones so far to announce EUV plans, because the technology is so complex and expensive. Okabayashi would only say that his company has “two or more” EUV customers.“This can be read as a sign that Lasertec’s tools are indispensable to Intel’s EUV roadmap.” said Damian Thong, an analyst at Macquarie Group Ltd.Read more: Japan’s Star Electronics Stock Will Be Vital to Intel, SamsungEUV is just entering the mass production phase after two decades in development, but investors are already betting Lasertec will be one of the key beneficiaries. The move to EUV overcomes key hurdles to shrinking manufacturing geometries of semiconductors, allowing more and smaller transistors to be crammed onto silicon. It promises to unleash another wave of gadgets that are slimmer, cheaper and more powerful.Last month, Lasertec raised its annual order forecast for the second time this year to 85 billion yen ($789 million) in the period ending June, nearly double the amount it received in fiscal 2019. The company is headed for the fourth straight year of record revenue and profits. Sales will climb 39% to 40 billion yen and profit will jump 76%, according to its estimates. And that’s likely to be just the beginning.Samsung earlier this month said it is building a 5-nanometer fabrication facility that will use EUV to make processors for applications ranging from 5G networking to high-performance computing from the second half of next year. Taiwan’s TSMC is pushing ahead with plans to adopt 3-nanometer lithography mass production in 2022 and announced plans to build an advanced fab in the U.S. Intel’s first product made using EUV is expected late next year.Their primary focus is on so-called logic processors, used to power devices and networking applications, but the new manufacturing technique will eventually filter through into the production of DRAM and other memory chips.Read more: Samsung Takes Another Step in $116 Billion Plan to Take on TSMC“Logic makers will be first to adopt EUV, with memory makers following later,” Okabayashi said. “The real volume of orders will come when they reach mass production stage. Right now it’s 7- and 5-nanometer chips. 3-nanometer is still in development stage.”Okabayashi expects each customer will probably need several of his testers, which could cost well over $40 million apiece and take as long as two years to build. A chipmaker would need at least one machine in its mask shop to make sure the stencils come out right. Another would go into a wafer fab to keep an eye on the microscopic wear and tear that result from concentrated light being projected repeatedly through the chip design stencils.“Lasertec is still trying to get a feel for this market and how big it can be,” Macquarie’s Thong said. “Their stock is moving on expectation of future orders. But there is little actual visibility on the scale of this market, so Lasertec retains a lot of capacity for surprise.”For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.

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