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Coca-Cola Amatil has warned that post-budget weak consumer sentiment will mean tough trading conditions ahead and the company also says it will continue to grow its presence in "better for you" categories.

The company today reported a first half net profit of $182.3 million, down 16 per cent on the previous corresponding half, roughly in line with forecasts.

“The expected trading conditions have continued and indeed since the Federal Budget in May we have experienced further deterioration and evidence of consumer promotional fatigue consistent with weaker consumer sentiment,” CCA’s group managing director, Alison Watkins said.

“Promotional activity yielded disappointing results and rate realisation continued to be under pressure due to weaker consumer demand, aggressive competitor pricing and private label activity in both water and flavoured carbonated beverages.”

CCA said its alcoholic beverages delivered a modest decline in earnings as a result of the impact of a decline in the dark spirits category on Beam earnings, though Canadian Club continued to perform well.

The company's canned fruit company, SPCA , also delivered a small loss, though this was an improvement in performance over last year, on improved revenues and strong customer and consumer support.

“It is clear that CCA is facing a number of immediate challenges, particularly in the Australian beverage and Indonesian markets,” Watkins said.

She said the beverage landscape, particularly in Australia and New Zealand, “has been evolving over the past five years with increased competition from existing players, greater penetration of value and private label products, a shift toward 'better for you' products and the continued consolidation of the customer base in both grocery and national accounts”.

“As a business we have been slow to adapt to these changes in market conditions and shifting consumer trends," she said.

According to Watckins, CCA now has a clear category and brand plans in place to strengthen its leadership in carbonated beverages as well as a strategy to increase its presence in "non-carbonated and high-potential categories".

“Central to our long-term brand strategy is the commitment to developing a greater range of “better for you” beverage options and we are working closely with The Coca-Cola Company to increase our brand investment to build long-term brand equity,” she said.

“While it’s too early for full year guidance, we expect earnings for 2014 to be materially below 2013. Second half earnings, however, should exceed the first half, before significant items.”

“Finally, this is a difficult year for our employees and shareholders. We are making some hard decisions and implementing a range of positive changes that will provide a foundation for sustainable growth in the years to come. CCA is a great company with very strong foundations.”

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