Johannesburg - The share price of Coca-Cola bottler Amalgamated Beverage Industries (ABI) seems to have taken the recently released interim results in its stride.
Since the announcement of the 22 percent increase in adjusted headline earnings, the share price has eased back slightly to R64.85 from R66 ahead of the results.
The continued strong performance and outlook of ABI in South Africa is in strong contrast to that of the Coca-Cola operation in the US. A recent report in Fortune magazine refers to flat prospects from the soda giant.
Operating income has grown an average of just 4 percent in the past five years, while sales growth has averaged a mere 3 percent.
That's on the operating side - the US company has also suffered a number of public relations nightmares in recent years.
The troubles in the US appear to be compounded by consumers' recent obsession with diet and obesity. Vending machines in schools, which are an important sales outlet, are coming under increasing criticism for this reason.
By contrast, ABI continues to achieve annual volume increases of around 6 percent and earnings advances in the high teens or low twenties.
Managing director Mark Bowman said that although good volume growth was expected to continue, it was important to be able to anticipate changes in consumer trends.
South Africa was generally a healthier, outdoor society but developments needed to be tracked; there were a lot of healthy choices on offer in ABI's drinks portfolio.
Bowman noted that the recent cut in interest rates was expected to underpin strong consumer spending but noted that the cuts did not appear to have as fast an impact on spending as the tax relief provided in last March's budget.
He would not comment on market speculation that SABMiller, which holds 72 percent of ABI, would make a bid to buy out the minorities other than to note that over time this had been built into market expectations and the share price.
There were a number of considerations involved such as timing, pricing, the opportunities and the possible benefits that might accrue to SABMiller.
Bowman explained that synergies were limited by the government's regulations, which prohibited the distribution of soft drinks with alcohol.
On the group's large and growing cash pile, Bowman said management was considering a number of possibilities including acquisitions, a share buyback or a special dividend payment.
All in all, this is a much cheerier outlook than on Coca-Cola's home ground in the US.
ABI closed 35c down at R64.50.
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