Coca Cola Amatil Ltd announces a substantial drop in its earnings. Amatil attributes loss in the first months to its slashed down prices caused by Coke's price rivalry with Pepsi Co. Inc in Australia.

Amatil is the exclusive distributor of the Coke products for the territories of Australia, New Zealand, Fiji, Indonesia and Papua New Guinea.  Owned by US Coca Cola by 29%, Amatil's net profit dropped from January to June at 12.3% to AUD 215.9 million(USD 197.1 million). Pepsi Next was launched in February 2012. In order to compete with its rival, Amatil cut its prices by an average of 1%-2%.  

Amatil was dragged down by a 10% decrease in Australian earnings.  Amatil's earnings fell 6.9% in the first six months to AUD 373.9 million.  Marginally better than its forecasted 9% in May that sent shares plummeting with the news. 

In a statement, Terry Davis, Chief of Executive for Coca Cola Amatil said, "While the Australian non-grocery business continues to perform well, the trading conditions in the grocery channel continue to be challenging."

The start of summer in the southern hemisphere overlaps with the Christmas season and may help rake in profits.   So unless trading improves in November and December, no growth is anticipated by the company for the rest of the year.