CCL Cuscal Ltd

   By Mike Cherney 
 

SYDNEY--The top executive at Coca-Cola Amatil Ltd., the Australian bottler of Coke-brand beverages, says Australia's drinks market is a "challenging environment," but is confident the company has a plan to navigate the shift in consumer preferences away from sugary soft drinks.

Managing Director Alison Watkins said returning the company's Australian beverages division to earnings growth "requires reconfiguring many aspects of the business." Underlying earnings in that division fell 1.8% in 2016, despite growth in Indonesia and New Zealand.

Ms. Watkins said the company is reducing sugar content in the Fanta and Sprite brands and will continue to invest in the Mount Franklin bottled water brand. The company also announced Wednesday a revamp of its Australian supply chain, with plans to close manufacturing facilities in South Australia but invest in another facility in Queensland. The move is expected to cut costs in the long run.

"We're doing everything that we can within our control," Ms. Watkins said when asked about the company's performance in Australia. "We've seen some really good, encouraging signs."

As the company seeks to retool its Australian business, Ms. Watkins sees further opportunity in the Indonesia market. A soft economy there shouldn't preclude Coca-Cola Amatil from gaining market share and growing the business, she said.

She also said the company remains committed to the SPC packaged-fruit business, which has been struggling amid competition from cheaper imports. Still, she said the business is taking longer than expected to hit profitability. The company booked a A$171.8 million impairment charge on SPC in the 2016 result, and the writedown pushed full-year net profit 37% lower than the previous year.

Despite the drop in net profit, the company said underlying earnings rose by 3.5% and management announced a share buyback of up to A$350 million, reflecting its confidence in the business. Shares were up nearly 6% in recent trade to A$10.49.

-Write to Mike Cherney at mike.cherney@wsj.com

(END) Dow Jones Newswires

February 21, 2017 22:54 ET (03:54 GMT)

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