Coca-Cola Amatil Profit Falls on SPC Writedown

   By David Winning 
 

SYDNEY--Australian bottler Coca-Cola Amatil Ltd. (CCL.AU) said its annual net profit fell 37% in 2018, as the company absorbed a writedown on its SPC fruit-and-vegetable processing business and struggled with a consumer shift away from sugary drinks.

The company said its net profit in the year through December totaled 279.0 million Australian dollars (US$200 million) after a writedown triggered a A$122.5 million loss on the SPC division that is up for sale. Underlying profit, which strips out one-time items, fell by 6.5% to A$388.3 million. Revenue, meanwhile, rose by 1% to A$4.8 billion.

Coca-Cola Amatil declared a final dividend of 26.0 Australian cents per share, unchanged on a year ago.

The lackluster result didn't come as a surprise, given Coca-Cola Amatil had signaled the impairment charge against the SPC unit earlier this week. The company said it had received strong interest in SPC from buyers, and several Australian and overseas parties have been shortlisted after making initial offers.

At its annual shareholder meeting in November, management had also warned that Australian beverage volumes in the second half were tracking lower than the previous year. Its performance in Indonesia, previously a bright spot for the company, has been hurt by soft demand, cost pressures and a weak currency.

Amatil has tried to expanding into non-cola options. It recently took a stake in Made Group, which makes coconut water and other drinks. It also launched new flavors for still water under the Mount Franklin brand, such as lemon and lime, pineapple and mint, and strawberry, all with no sugar.

Adding to Amatil's challenge, some analysts said cooler and wetter weather in Australia in November and December could have hurt sales. Several new container-deposit schemes in various Australian states could be having a negative impact, too.

"2019 will be the second year of a two-year transition phase for the group," Managing Director Alison Watkins said. "The Amatil Group is targeting a return to mid-single digit EPS growth from 2020, in line with our shareholder value proposition."

-Write to David Winning at [e-mail]

(END) Dow Jones Newswires

February 20, 2019 18:10 ET (23:10 GMT)

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