José Antonio Garcés had been an executive in a Said enterprise before branching out into cosmetics and real estate. Alberto Hurtado Fuenzalida, also a seasoned executive and entrepreneur, named the group for a relative who had been president of Chile in the 1920s. The other shares belonged to Vial Espantoso’s heirs and to public stockholders.
- In spite of this setback, Embotelladora Andina remained the largest of Coca-Cola’s four Chilean-based franchisers and one of its anchors for doing business in South America.
- Looking at the 2022 inflation and exchange rate data, we can see that the macroeconomic environment in Argentina and to some extent Chile was challenging, but the Brazilian real was strong.
- The latest quarterly dividend for the Series A ADRs was $0.22 apiece which translates into a dividend yield of 7% on an annualized basis.
- Embotelladora Andina S.A., together with its subsidiaries, produces, markets, and distributes Coca-Cola soft drinks in Chile, Brazil, Argentina, and Paraguay.
- EMIS company profiles are part of a larger information service which combines company, industry and country data and analysis for over 145 emerging markets.
This represents a $0.82 dividend on an annualized basis and a dividend yield of 7.39%. Turning our attention to the balance sheet, debt levels seem manageable, and I don’t expect the company to be affected by rising interest rates significantly for the time being as most of its debt is payable after 2026. As of December 2022, the net financial debt of Embotelladora Andina stood at $731 million and the net debt-to-EBITDA ratio was 1.3x.
Overview of the business and financials
The company was also affected by COVID-19 lockdowns and production is now at pre-pandemic levels. Overall, sales volumes have been increasing by around 5% year on year, mainly thanks to the addition of new products. AKO had a stellar run through August with its share prices soaring over 50% for the year, however, with recovery stumbling in Argentina and normalizing growth in Brazil (sales and volume growth review calculated bets decelerating sequentially), the ticker receded. We believe the current valuation provides a balanced risk reward with downside pressure as a result of elevated commodity costs and reiterate our hold rating. Andina posted mixed Q2 results with revenues growing 3.8% YoY largely in line with consensus results. The growth was driven by 1.8% growth in volumes along with modest benefit of pricing actions.
In Argentina, aside from Coca-Cola products, the operation’s soft drinks were Quatro Pomelo and Quatro Limonada, three Schweppes soft drinks, three Crush soft drinks, and Tai Lima-Limon and Naranja. Embotelladora Andina invested $1 million in 1999 in Chile to offer retailers carrying its beverages–the small sweet shops, kiosks, and bakeries, for example–training in new sales and marketing understanding moving average indicators techniques. 2 Wall Street analysts have issued 12-month price targets for Embotelladora Andina SA ADR Series A’s shares. On average, they expect the company’s stock price to reach $18.00 in the next twelve months. This suggests a possible upside of 61.3% from the stock’s current price. View analysts price targets for AKO.A or view top-rated stocks among Wall Street analysts.
Embotelladora Andina SA Categories
In addition, the 8-day strike at the company’s Cordoba plant also weighed in on the volumes with an estimated impact of ~1 mn cases. Cost of sales grew 3.7% in line with revenue growth as favorable benefits from a decline of PET prices were largely offset by higher labor costs and concentrate costs. Another method of determining the profitability of a company is to compare its return on invested capital to the weighted average cost of capital. Return on invested capital (ROIC) measures how well a company generates cash flow relative to the capital it has invested in its business.
Company Embotelladora Andina S.A.
Edasa opened a new Córdoba production facility in 1999 and shut down the Mendoza and Rosario plants in 2002, concentrating all drink production operations in Córdoba. The following year Edasa took over Cipet, thereby placing all business conducted in Argentina in Córdoba. Andina, in 2000, became the Coca-Cola bottler for three Brazilian territories in addition to Rio de Janeiro by purchasing them from the franchise holder for $74.5 million. But Brahma had created new problems for the Brazilian operation by becoming a distributor for rival PepsiCo. Shortly after, this competition grew even stronger when Brahma and Antarctica merged to form Companhia de Bebidas das Americas (AmBev). Embotelladora Andina entered Brazil in 1994 by purchasing 61.5 percent of Rio de Janeiro Refrescos S.A., the Coca-Cola bottler in the nation’s former capital, for $120 million, plus the assumption of $31 million in debts.
To be fair, the dividend yield on both is likely to decline in 2023 as Embotelladora Andina paid a large extraordinary dividend in April 2022. The latest quarterly dividend for the Series A ADRs was $0.22 apiece which translates into a dividend yield of 7% on an annualized basis. In my view, the dividend yield levels will remain decent over the coming years as Embotelladora Andina is mandated by Chilean law to distribute at least 30% of its net profit as dividends.
AKO.A Company Calendar
Embotelladora Andina has a total of 14 production facilities and over 90 distribution centers and employs more than 18,000 people. Looking at the shareholders list, a group of four families holds a 38% stake, Coca-Cola has 7.3%, and a total of 3.2% of the shares are listed in the USA as American Depositary Receipts (ADRs). Embotelladora Andina has two classes of stock – Series A which allows shareholders to elect 12 of the 14 board members, and Series B which give shareholders an additional 10% in dividends.
Embotelladora Andina, at the end of 1996, was producing 71 percent of all carbonated soft drinks in Chile and 91 percent of all cola drinks there. In addition to its licensed Coca-Cola beverages, fruit juices and mineral water accounted for 14 percent of Andina’s sales in that country. In Brazil, Rio de Janeiro Refrescos was, in addition to producing and distributing Coca-Cola products, distributing Heineken and Kaiser beer brands and a brand of mineral water. In Argentina, Edasa and Inti were only producing and distributing Coca-Cola beverages. Andina’s revenues were heading toward $1 billion a year, and the company was employing 6,500 workers, compared with 350 when it was purchased in 1985.
Sales per Business
(Edasa), the parent company for the Coca-Cola bottlers in the Mendoza and Rosario territories, for about $45 million. Edasa, which established its headquarters in Córdoba, also acquired full control of Complejo Industrial Pet S.A.I.C. (Cipsa), supplier of plastic bottles for the Coca-Cola system in Argentina, Paraguay, and Uruguay, for $76 million. Although Cipsa held a majority interest in a bottling plant in Buenos Aires, Embotelladora Andina was unable to obtain the franchise in Argentina’s giant metropolis. Coca-Cola awarded the license instead to Mexican-based Fomento Economico Mexicano S.A.
Inflation in Argentina continues to skyrocket with the latest reading for August crossing the 120% mark. This is likely to put a dent on the consumer confidence and recovery which has seen some bottoming in the early part of the year. AKO generates about 25% revenues from Argentina and we expect volumes to decline mid single digits for H2 until the inflationary pressures subside.
The 3-year average annual revenue growth rate of Embotelladora Andina SA is14.3%, which ranks better than 81.05% of 95 companies in the Beverages – Non-Alcoholic industry. The 3-year average EBITDA growth rate is 1.2%, which ranks worse than 62.77% of 94 companies in the Beverages – Non-Alcoholic industry. Investing in profitable companies, especially those that have demonstrated consistent profitability over the long term, poses less risk. A company with high profit margins is also typically a safer investment than one with low profit margins. Over the past twelve months, the company had a revenue of $3.20 billion and Earnings Per Share (EPS) of $0.98. Its operating margin is 12.5%, which ranks better than 67.92% of 106 companies in the Beverages – Non-Alcoholic industry.
The company is scheduled to release its next quarterly earnings announcement on Tuesday, October 24th 2023. Click the link below and dynamic locale en angularjs we’ll send you MarketBeat’s guide to investing in electric vehicle technologies (EV) and which EV stocks show the most promise.
