COCA-COLA Amatil shares slumped after the company said soft consumer spending, and competitive discounting, is affecting sales growth of its beverages.
CCA chief executive Terry Davis said the trading environment in its core Australian business ''remains challenging'' although it had improved momentum in the lead-up to Christmas.
''Consumer spending levels continue to be soft, a continuation of the trend we have experienced over the past 18 months, while price-driven competitor activity during the second half has restrained volume growth,'' Mr Davis said.
CCA said it expected to record volume and revenue growth for the December half year and stuck to guidance of 4 to 5 per cent profit growth before significant items for the year to December 31, but analysts said there was little room for disappointment from the iconic consumer staple.
The stock dropped more than 3 per cent during trading on Wednesday before closing 36¢ lower at $13.56.
''The valuation hasn't taken into account that there's natural risk around the weather for this stock,'' UBS analyst Dan Hurren said.
''We've had a relatively cool start to the summer months in Australia,'' he said.
CCA's business in Indonesia and Papua New Guinea continued to grow strongly but its New Zealand and SPC Ardmona businesses had curtailed earnings growth for the second half.
The company also announced it had added to the range of alcoholic beverages it would offer when a non-compete clause with Foster's new owner, SABMiller, expired at the end of next year. CCA has signed up to distribute Sweden's Rekorderlig cider from January 1, 2014, giving it exposure to the fastest growing category in Australia's alcoholic beverages sector. CCA said cider sales were growing 20 per cent annually and were worth $550 million.
CCA is prevented from selling beer or cider in Australia under the agreement but it has a spirits and ready-to-drink business in Australia with Beam Global.
CCA said another recent acquisition, the brewery and spirits business in Fiji it acquired from Foster's, was performing ahead of expectations.
The company would also continue to invest heavily in Indonesia and PNG. CCA has acquired bottling facilities in Indonesia from San Miguel for $45 million and is completing the acquisition of a warehouse in PNG for $28 million.
Mr Davis said that as a consequence of the strong growth from Indonesia and PNG in 2012, and promising outlook, the company had increased its capital expenditure in the region to about $150 million and had committed to ''up-weight'' its investment again next year.