Coca-Cola Amatil Net Profit Falls On Packaged-Fruit Impairment Charge

   By Mike Cherney 
 

SYDNEY--Australian bottler Coca-Cola Amatil Ltd. (CCL.AU) said its annual net profit fell 37% due to an impairment charge in its struggling packaged-fruit business and challenges in Australia's drinks market.

The company, which counts Coca-Cola Co. (KO) as its major shareholder, reported a net profit of 246.1 million Australian dollars (US$189 million) in 2016. Underlying earnings before interest and tax rose 3.5% to A$683.4 million, while total revenue rose 1.3% to A$5.25 billion.

The company declared a final dividend of 25 Australian cents a share, an increase of 6.4% on-year. That brought total dividend payouts in 2016 to 46 Australian cents, a rise of 5.7%.

Coca-Cola Amatil said it also would launch a share buyback program of up to A$350 million, beginning in late March.

Excluding an impairment charge for its SPC packaged fruit business, the company said its profit rose 6.2% to A$417.9 million.

Coca-Cola Amatil said it continued to target mid-single-digit earnings-per-share growth, and that its performance would depend on the success of revenue initiatives in Australia as well as economic factors in Indonesia. In the SPC business, the company said market conditions, including tougher competition from cheaper imports, had put pressure on the division's short-term profitability.

Like other beverage companies, Coca-Cola Amatil has been struggling with shifting appetites as customers in developed markets shy away from sugary carbonated beverages. The company has tried to tap into the trend and rolled out new packaging, product innovation and marketing for its Mount Franklin bottled water brand. The company's alcohol and coffee division has also been a bright spot.

Underlying earnings before interest and tax in its Australia division fell 1.8% over the year.

In Fiji and in New Zealand, where the company has a new partnership with fast-food franchises KFC and Pizza Hut, earnings rose 6.9%. Earnings were up 43% in its Indonesia and Papua New Guinea division, and rose by 31% in its alcohol and coffee unit.

Analysts see large growth potential in the company's Indonesia business, but had cautioned the second-half results could be lackluster because Ramadan--a big sales period--took place largely in the first half of the year. Underscoring the business opportunity there, a subsidiary of Coca-Cola Co. invested US$500 million in Coca-Cola Amatil's Indonesian business in 2015.

Write to Mike Cherney at [e-mail]

(END) Dow Jones Newswires

February 21, 2017 17:26 ET (22:26 GMT)

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