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Coca Cola Amatil's NZ earnings flat as grocery sales of fizzy falls

Coca-Cola Amatil, which bottles Coca-Cola, Lift, Fanta and other drinks brands, said earnings in New Zealand were flat as sales of fizzy drinks in grocery stores were weaker.

The Sydney-based company said New Zealand earnings were flat on a local currency basis, with the broader grocery market "sluggish". Coca-Cola Amatil's New Zealand and Fiji unit, which report together, lifted earnings before interest and tax 6.7 percent to A$88.2 million in the 12 months ended Dec. 31, due to currency gains, while trading revenue advanced 7.8 percent to A$488 million. The segment shifted 61.3 million cases in the period, down from 61.5 million case a year earlier.

The New Zealand unit grew overall market share across all categories except carbonated beverages, which weighed on volumes through grocery stores, the company said. That was due to poor weather, increased inventories, a high level of rival discounting, and anti-sugar sentiment. Juice, water and energy categories performed well with volume growth and share gains, offsetting declines in Coca-Cola Amatil's fizzy drink segment.

Coca-Cola Amatil is ramping up its exposure to Indonesia, which it sees as offering major growth potential, and, subject to shareholder approval, will set up a joint venture with shareholder The Coca-Cola Co who will inject US$500 million to fund the expansion.

The group increased net profit 240 percent to A$272.1 million on a 1.9 percent decline in trading revenue to A$4.94 billion, reflecting impairment charges the year earlier.

Managing director Alison Watkins said the company's earnings have been under significant pressure in recent years due to structural changes in the marketplace, and anticipates its revenue and cost initiatives will return the business back to growth.

"The pace of recovery will however depend on the success of revenue initiatives underway in Australia and Indonesian economic factors," Watkins said.

The board declared a final dividend of 22 Australian cents per share, payable on Feb. 24 with an ex-dividend date of Feb. 20.

The shares rose 4.9 percent to A$10.47, and have gained 7.1 percent this year.