SPC drags down Coca-Cola Amatil result

  • February 19, 2013
  • Kate Carey

Coca-Cola Amatil (CCA) has today released its half yearly results up until December 31, 2012, reporting a 22 per cent annual drop in profit.

Largely attributed to its struggling SPC Ardmona business, CCA reported $98.5 million in writedowns in what Managing Director Terry Davis said was a “disappointing performance.”

CCA’s net profit of $459.9 million was also down from $591.8 million at the same time last year.

The difficulties of its SPC Ardmona business continued on from its previous report in December 2012 in which Mr Davis also said the “high Australian dollar” and “cheaper supermarket labels and imports” were to blame.

“The ongoing impact of the high Australian dollar on the competitiveness of the SPCA business, the significant deflation of fresh fruit prices and the growth of imported grocery private label packaged fruit and vegetables has necessitated a second half significant write-down in SPCA assets and goodwill,” Mr Davis said.

The restructuring of the SPC business continues with the consolidation of fresh fruit manufacturing into Shepparton. Restructing of the international business as well as other initiatives also continues to reduce the cost of doing business in the SPC Ardmona division.

By the end of the fruit picking season, CCA expects inventory levels to be back to “optimal levels.”

Volume and EBIT growth in Australia of 3.3 per cent was delivered against what CCA called a “backdrop of a weak consumer spending and very poor weather in the first quarter.” Despite “sustained aggressive competitor discounting” in the second half, market share increased in sparkling beverages and EBIT margins were maintained above 20 per cent.

Mr Davis said that CCA “remained concerned” about the “generally weak consumer spending environment which has persisted for the last two years.”

CCA’s growth in alcohol earnings

Overall, alcohol, food & services earnings increased by 2 per cent due to a solid result from spirits and alcoholic ready-to-drink beverages, offset by a decline in SPC Ardmona earnings.

While CCA dominates the Australian non-alcoholic beverage market, progress was also made for the expansion of its alcoholic beverage business areas. CCA has strengthened its brand portfolio including an agreement to form a beer manufacturing joint venture with Casella in Australia that will commence in December 2013. CCA also announced that it would begin distributing Rekorderlig cider in 2014.

Internationally, CCA acquired the Foster’s Fiji brewery and distillery (renamed Paradise Beverages (Fiji)), and commenced distribution of premium beer for Grupo Modelo, Carlsberg and Molson Coors in Fiji, Papua New Guinea and the Pacific Islands.

New Zealand hit hard by “bad weather”

The New Zealand business delivered what CCA described as a “disappointing result” with a decline in volume and earnings. CCA experienced a poor start to 2012 as New Zealand recorded one of the coolest and wettest summers on record and the New Zealand economy and consumer confidence “remained very soft” throughout the year. In addition, volumes were impacted by a significant reduction in stock held by major customers as they focused on more efficient working capital management.

CCA's SPC Ardmona business dragged down its results.


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3 Responses to “SPC drags down Coca-Cola Amatil result”

  1. Who is Looking After Our Interests? - AUSBUY: Buy Australian Owned & Grown on April 30th, 2013 11:07 am

    […] Food News reported in February 2013 that SPC Ardmona’s troubles had led to a 22 per cent drop in earnings for its […]

  2. Gayle Cross on May 3rd, 2013 8:17 pm

    I am baffled why a beverage company such as Coke is wielding so much influence and power on Australians. To lose our fruit bowl, to lose Australian grown fruit and vegetables is illogical and for the sake of $$$. I feel very concerned for the impact this has not only on Australians right to purchase Australian grown products but also I feel concerned about the quality of imports and chemicals used to grow them. Is any one else concerned for the impact this will have on farmers and their families? People who have farmed their land for generations. I WANT to buy Australian owned and grown..

  3. Bobson on May 9th, 2013 11:17 pm

    @Gayle Cross

    Your reasoning is what is illogical. You have to get over your patriotism and accept globalisation. If farmers can’t adapt to their competition then they should face the consequences like everyone else.

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