February 17, 2014 / 11:36 PM / 4 years ago

UPDATE 1-Australia Coca-Cola Amatil earnings plunge on SPC writedowns

(Updates with SPC writedown details, share reaction)

SYDNEY, Feb 18 (Reuters) - Australian soft drink bottler Coca-Cola Amatil posted an 83 percent fall in full-year profit on Tuesday, its worst result for 20 years as earnings were hit by a writedown at its struggling SPC Ardmona fruit cannery.

CCA, which has also been hurt by a price war with Suntory-owned Schweppes, said it will launch a review of its operating cost structure amid concerns about weak consumer confidence and spending.

Shares in the company fell 5.5 percent in early trading to A$11.20, touching a two-and-a-half year low. The stock is down about 20 percent over the past year.

CCA's net profit fell to A$79.9 million ($72.1 million) from A$457.8 million a year ago, as it wrote off SPC Ardmona assets by A$404 million.

The Victorian state government stepped in last week with a A$22 million subsidy to help bailout out the cannery and preserve jobs after the federal government rejected pleas from CCA for a A$25 million grant.

CCA said the writedown reflected the write-off of A$277 million in remaining goodwill, a A$39.7 million writedown in the value of brand names and a A$87.3 million charge covering writedowns in inventory, property, plant and equipment.

The bottler and distributor bought SPC for around A$700 million in 2005 and has since invested a further A$170 million on plant, equipment and technology.

CCA Managing Director Terry Davis said the poor 2013 results reflected, in part, difficult trading conditions for the company's Australian beverage business and competition for SPC from imported private label products.

CCA's Australian beverage business accounts for around 70 percent of its overall earnings, but the company is making a big push into Indonesia, whose population of 250 million people is around 10 times the size of the Australian market.

CCA said it expects to deliver volume growth of more than 10 percent in Indonesia in 2014, in line with 2013, but noted headwinds from a depreciation in the rupiah and high wages and fuel.

"While the medium term outlook for volume and earnings growth in Indonesia continues to be positive, 2014 local currency earnings growth is expected to be impacted by high cost inflation," the company said in a statement.

$1 = 1.1080 Australian dollars Reporting by Jane Wardell; Editing by Phil Berlowitz and Richard Pullin

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