AUS: Coca-Cola Amatil FY profits drop despite beverage gains

• FY net profits slide by 22% to AUS459.9m (US$475.7m)
• Net sales up by 6.3% to AUS5.18bn
• FY operating profits (EBIT) down by 12.6% to AUS761m
• Writedowns on packaged food business hit profits 

Coca-Cola Amatil (CCA) has posted a sharp drop in full-year net profits as write-downs in its packaged food business offset beverage gains in Australia, Indonesia and Papua New Guinea.

Net profits fell by 22% to AUS459.9m (US$475.7m) in the 12 months to the end of December, the Sydney-based company said today (19 February). Net sales rose by 6.3% to AUS5.18bn over the same period while operating profits fell by 12.6% to AUS761m.

The company did not release fourth-quarter figures.

CCA blamed foreign currency fluctuations, the deflation of fresh fruit prices and competition from imported labels for problems with its packaged fruit and vegetables business SPC Ardmona (SPCA) unit, which took a hit of up to AUS146m in write-downs and costs.

New Zealand & Fiji also dragged profits growth, with the region's operating profit down by 11.8% year-on-year.

CCA group MD Terry Davis acknowledged SPCA and New Zealand's “disappointing performances” but said that, minus significant items such as the SPCA write down, net profits were up by 5%.

Davis also said “the standout performer was once again Indonesia & Papua New Guinea” as the region posted double-digit volume and earnings growth. Australia also delivered strong volumes growth (3.3%), sales growth (5.1%) and increased market share, Davis said.

In December, CCA predicted a 4-5% rise in group net profits for the full year. 

It is not the first time CCA has suffered from poor performance by SPCA, which sells packaged fruit and vegetables. In 2011 H1 results, profits were damaged by an impairment charge on the business.

Looking ahead, Davis said that “material progress has been made” over plans to re-enter the Australian beer market this year. He also said the company has started a costs-savings programme that is expected to recoup about AUS30-40m in efficiency gains.

CCA is expected to re-enter the Australian beer market in early-2014, once the terms of the sale of its previous beer business to SABMiller has expired.

Momentum in Indonesia and Papua New Guinea is expected to continue. Davis said: “The outlook for growth continues to be positive with revenue expected to exceed AUS1bn for the first time in 2013."

CCA's share price rose slightly after today's results, up by 2% at close of trading.

To read the company's official statement, click here.