Coca-Cola Amatil Ltd., Australia’s largest beverages company, fell the most in more than a year in Sydney trading after saying weak consumer sentiment and discounting by competitors hurt growth in sales volume.
The stock declined 2.6 percent, its biggest drop since Nov. 17, 2011, to A$13.56 at the close in Sydney, with trading volume at more than three times the daily average in the past three months. “Price-driven competitor activity” has restrained sales volume growth in the second half of the year, and “consumer spending levels continue to be soft,” the Sydney-based company said in a statement today.
The Coca-Cola Co. bottler has been so highly rated by the markets that its share performance won’t permit any disappointment, Dan Hurren, an analyst at UBS AG, said by phone from Sydney. It’s the second-highest valued large Australian consumer staples company, using a measure of enterprise value and estimated earnings, according to data compiled by Bloomberg.
“The valuation hasn’t taken into account that there’s natural risk around the weather for this stock,” said Hurren, who rates Coca-Cola Amatil sell. “We’ve had a relatively cool start to the summer months in Australia.”
Coca-Cola Amatil said it still expects to boost volume and sales in the six months through December in Australia, its largest market responsible for about 70 percent of revenue.
Strong growth continues in the Indonesia and Papua New Guinea operations, while earnings in New Zealand and Fiji will fall in line with the broader market, the company said, without providing earnings figures.
Coca-Cola Amatil’s enterprise value is about 10.4 times estimated earnings this year, the second-highest after Treasury Wine Estates Ltd. among Australian consumer staples companies with more than A$1 billion ($1 billion) in annual sales, Bloomberg data show.