Coca-Cola Amatil Jumps After Profit Beats Estimates

Coca-Cola Amatil Ltd. rose the most in four months in Sydney trading after Australia's biggest soft- drink maker posted first-half earnings that beat analysts' estimates.

Coca-Cola Amatil gained 5 percent to close at A$8.34, its biggest climb since May 15. The climb trimmed this year's decline to 12 percent, compared with a 22 percent slide for Australia's benchmark S&P/ASX 200 Index.

Net income rose 22 percent to A$171.9 million ($150 million) in the six months ended June, beating the A$169.8 million median estimate of five analysts surveyed by Bloomberg News, after domestic soda sales and price increases boosted margins.

Chief Executive Officer Terry Davis is withstanding a slowdown in consumer demand by using his 60 percent share of the domestic soda market to raise prices faster than ingredient-cost increases. He sold his unprofitable South Korean unit a year ago to focus on adding beer and soft drinks in the Australian market.

"They are improving margins in all businesses, even in New Zealand and Indonesia where you could have expected an impact from economic slowdowns," said Theo Maas, who helps manage $5 billion of equities at Fortis Investment Partners in Sydney, including Amatil. "They probably spent way too much time trying to fix Korea and it's clear they have now focused on existing operations."

`Conservative' Forecast

Davis maintained his forecast for "high single digit" second-half earnings growth.

The forecast "is conservative but is consistent with management's approach historically," Andy Bowley, an analyst at Citigroup Inc., said in a note to clients after the earnings.

The Sydney-based company is 30 percent owned by Atlanta- based Coca-Cola Co., the world's biggest soft-drink maker.

Earnings before interest and tax in Australia, where Coca- Cola Amatil gets almost two-thirds of sales, rose 10 percent to A$219.1 million on demand for sodas and new drinks including Glaceau Vitaminwater.

The Australian profit margin, which measures earnings as a proportion of sales, rose to 19.1 percent from 17.6 percent on higher prices and sales of more profitable drinks.

"The standout performer has been Glaceau, launched in February, which is now expected to sell almost two million unit cases in 2008, four times the original forecasts," the company said.

Jim Beam, Absolut

Davis, 50, expanded into alcohol last year, taking over Australian distribution of Jim Beam bourbon and Absolut vodka. He also started a venture with SABMiller Plc, selling the London- based company's beers, including Pilsner Urquell and Peroni Nastro Azzurro.

In February, he agreed with SABMiller to build an Australian brewery to tap some of the A$1 billion in earnings the Australian beer industry generates.

Earnings from New Zealand and Fiji rose 11 percent to A$38.2 million. Indonesia and Papua New Guinea more than tripled earnings to A$10.4 million.

The company's food and services unit, including Australia's largest fruit canner, had an 7.2 percent rise in earnings to A$41.5 million on higher export sales.

Source: Bloomberg