Coca-Cola Amatil to Book Impairment Charge on Indonesia Unit Amid Pandemic

   By Mike Cherney 
 

SYDNEY--Australian bottler Coca-Cola Amatil Ltd. said Thursday that it would recognize an impairment charge on its Indonesian unit as the coronavirus pandemic disrupts business there, but that trading had improved in other key markets.

Coca-Cola Amatil said it would recognize a non-cash, post-tax impairment charge in a range of 160 million Australian dollars (US$114 million) to A$190 million at its first-half result, expected in August, and that it would mostly relate to its Indonesia unit.

The company added that it is currently assessing the carrying value of each of its businesses.

"These expected impairments are non-cash accounting adjustments and we remain very confident about the long-term prospects for our Indonesian business," said Managing Director Alison Watkins.

In June, Indonesia volumes declined by 23%, significantly more than other regions, as coronavirus infection rates remain high. In Australia, volumes were down just 3% in June, and volumes were up 4% in New Zealand, where a significant easing of restrictions has taken place.

Overall, group volumes declined by 9% in June and by 23% in the second quarter, Coca-Cola Amatil said. It also warned that margins have been adversely impacted, with consumers tending more toward the grocery channel and away from higher-margin on-the-go channels.

"It is encouraging to see the improvement in our volumes as the pandemic restrictions were lifted across a number of our markets," Ms. Watkins said. "We nevertheless remain cautious, given the reinstatement of lockdown measures from July in Melbourne and the rising Covid-19 infection rate in Indonesia."

Write to Mike Cherney at [e-mail]

(END) Dow Jones Newswires

July 22, 2020 19:26 ET (23:26 GMT)

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