Coca-Cola Amatil Forecasts `High Single Digit' Growth

Coca-Cola Amatil Ltd., Australia's biggest soft-drink maker, forecast profit growth in the ``high single digits'', rebounding from little-changed earnings in the second half of 2007, as sales recover and cost growth slows.

Coca-Cola Amatil rose as much as 5.41 percent to A$8.38 in Sydney trading, headed for the biggest gain in almost four months and trimming this year's loss to 12.7 percent. The stock traded at A$8.29 at 11:16 a.m. local time.

Chief Executive Officer Terry Davis, facing slowing Australian consumer spending amid record fuel prices and 12-year high interest rates, is building a domestic brewery with joint venture partner SABMiller Plc as he seeks to bolster earnings by expanding in alcohol after selling off an unprofitable South Korean unit.

``The growth of our premium beer business, including the Peroni and Bluetongue brands, in the first quarter has been outstanding, with total beer revenues more than doubling over last year,'' Davis said today in a statement.

First-half revenue will be little changed in Australia and grow in New Zealand, Sydney-based Coca-Cola Amatil said in a statement today. Production costs are expected to rise by 3 percent or more, compared with its February prediction of as much as 4 percent, on slower price growth for sugar and aluminum cans.

South Korean Divestment

The company said Feb. 13 that profit was little changed at A$169.8 million in the six months ended December compared with A$168.1 million a year earlier, after recording a loss from the sale of its South Korean bottling unit.

``Many of the issues facing Coke Amatil are facing the entire consumer branded industry,'' Penny Heard, an analyst at Merrill Lynch & Co. in Melbourne, said in a May 12 report. ``We see Coca-Cola Amatil being better positioned than most,'' said Heard, who rates the stock ``buy.''

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

Davis sold the unprofitable South Korean unit to LG Household & Health Care Ltd. in October for A$520 million including debt.

Davis expanded into alcohol in 2006, taking over Australian distribution for Jim Beam bourbon and Absolut vodka, and starting a joint venture with SABMiller to sell the London-based company's beers including Pilsner Urquell.

The alcohol business had sales of more than A$300 million in 2007, its first year of operation.

Coca-Cola Amatil and SABMiller in December bought Bluetongue Brewery Pty. and its Newcastle plant for their first beermaking facility in Australia.

The venture will build a 50-million liter brewery in New South Wales state by 2010 as they seek to tap some of the A$1 billion in earnings the Australian beer industry generates.

Coca-Cola Amatil's nearest soda-drink rival in Australia is Cadbury Schweppes Plc., the domestic bottler of Pepsi.