Coca-Cola Amatil Launches New Cost-Cutting Program As Consumers Shun Sugary Drinks

   By Mike Cherney 
 

SYDNEY--Coca-Cola Co.'s Australian distributor told shareholders at an investor day Friday that it identified at least another $100 million Australian dollars (US$76.3 million) in "cost optimization opportunities," saying the savings will ultimately help its local business return to revenue growth.

Like beverage companies worldwide, Coca-Cola Amatil (CCL.AU) has been struggling with shifting consumer preferences as customers shun sugary, carbonated beverages in favor of healthier options like bottled water. Net profit in the first half of 2016 rose nearly 8%, but earnings in Australia -- Coca-Cola Amatil's largest market by far -- were off about 2%.

The company said it will deliver the latest round of savings over the next three years, and will be focusing on its supply chain, sales force, procurement and support services. It said the company will incur about A$50 million in restructuring costs and A$75 million in capital expenditures in 2017, some of which it hoped to offset with a potential sale and leaseback arrangements.

Coca-Cola Amatil in 2014 embarked on an initial A$100 million optimization program, and said it expected to deliver those savings this year.

"While the structural changes in our industry will continue, we know what we need to do and there's a lot to be positive about," Group Managing Director Alison Watkins said in a press release.

The company's stock was down about 0.5% to roughly A$10 a share in early trading Friday.

Write to Mike Cherney at [e-mail]

(END) Dow Jones Newswires

October 20, 2016 19:55 ET (23:55 GMT)

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