COCA-COLA Amatil (CCA) has ended speculation over the future of its managing director Terry Davis by announcing his retirement – but not until he leads the beverage giant into the Indonesian and alcoholic drinks markets.
CCA on Monday said Mr Davis would continue in the role until August 31, 2014 before retiring.
CCA chairman David Gonski said there had been much speculation during the past 18 months over Mr Davis’ tenure, and he was pleased to confirm that he would be staying on until well into next year.
“The next 18 months will be crucial for CCA in the further development of its alcoholic beverage strategy and the accelerated plans for growth of the Indonesian business, and the board felt it was prudent to provide the market with certainty as to Terry’s tenure,” he said.
He said the board would start searching for a replacement in current months and expected to include both internal and external candidates.
CCA shares tumbled 36 cents, or 2.33 per cent, to $14.88 shortly after the announcement, before recovering slightly.
But CMC Markets chief market analyst Ric Spooner said considering the Australian market was trading lower on Monday, CCA’s drop was not as dramatic as it first appeared.
“That said Mr Davis has been an effective chief executive so the news of succession introduces a little bit of risk,” he said.
He said the company also had plenty of time to choose Mr Davis’ replacement and ensure a smooth transition.
“I think the expectation will be that it’s very much business as usual,” he said.
Mr Gonski said in the 11 years Mr Davis has been at the helm the company has been transformed into a world-class premium multi-beverage business.
“The market capitalisation of CCA has increased from $3.5 billion to $11.4 billion, group return on capital has increased from just over seven per cent in 2001 to 24 per cent today, generating total shareholder returns of nearly 400 per cent,” he said.
CCA expects to progressively increase its investments in Indonesia by nearly half a billion dollars over the next three to four years.