Australian Consumer Sentiment Subdued, Says Soft Drinks Maker
Australian soft drinks bottler Coca-Cola Amatil reported a 61 percent jump in first half net profit driven by growth in Indonesia and a pick-up in sales in Australia, but Managing Director Terry Davis remains downbeat about consumer sentiment at home.
"Sentiment overall in Australia doesn't look like it's on an upward trend, so I'd say it's still a pretty subdued consumer environment at this point," he told CNBC's"Cash Flow" on Wednesday.
Davis added that the Australian government's handouts to consumers in May and June gave sentiment a brief boost, but it has since petered out.
"If people are worried about their jobs, they entertain less, they go out less, consumer spending is a continuing challenge," he said.
The Westpac-Melbourne Institute index of consumer sentiment, a key measure of consumer confidence in Australia, fell 2.5 percent to 96.6 in August from a seasonally adjusted 99.1 in July.
The Australian government announced a series of sweeteners and incentives this year including increasing pension payouts and rebates to help consumers deal with the added burden of the carbon tax that was introduced on July 1, 2012, which companies are passing on to consumers.
Davis also said that policymakers should consider easing mortgage rates to free up cash for consumers and give the economy a boost, "...anyone with a mortgage will say give me another half a point percentage drop and I'm gonna do something with that money."
The Reserve Bank of Australia kept its official cash rate on hold at 3.5 percent at its August policy meeting. Minutes from that meeting showed the central bank believed its current policy stance is appropriate.
Australia-listed Coca-Cola Amatil said net profit including significant items rose to A$247.2 million ($258 million) for the half year-ended June 30, and announced an interim dividend of A$0.24 a share.
The firm bottles and distributes soft-drinks for Coca-Cola company, which holds a minority stake in the Australian bottler. Coca-Cola Amatil also said it is planning to re-enter the premium beer market and announced Wednesday a brewing joint venture with privately owned Casella Wines of Australia.