Coca-Cola Amatil Earnings Miss Estimates on Foods Writedown

Coca-Cola Amatil Ltd., Australia’s largest soft-drink bottler, posted full-year profit that missed analyst estimates after taking A$146 million ($150 million) of writedowns on its packaged food business.

Net income fell 22 percent to A$460 million in 2012, the Sydney-based Coke bottler said in a statement today. That compares with the A$558 million average of nine analyst estimates compiled by Bloomberg. Profit before one-time charges rose to the top of the company’s forecast of a four percent to five percent growth rate.

Imports of cheaper overseas produce and a 20 percent fall in the price of fresh fruit forced a writedown at its SPC Ardmona foods business, whose products include tinned tomatoes and Goulburn Valley fruit in syrup, the company said. The previous year’s profit included a A$60 million one-time gain related to the sale of its beer venture to SABMiller Plc.

“The high Australian dollar continues to have an impact on SPC, reducing its product’s competitiveness versus imports,” Mark Christensen, an analyst at Morgan Stanley in Sydney, wrote in a Feb. 5 note to clients.

Coca-Cola Amatil shares rose 1.7 percent to A$13.86 at 10:36 a.m. in Sydney. The stock has gained 17 percent in the past year, trailing the 20 percent rise in the benchmark S&P/ASX 200 index. The Coke bottler is 29 percent owned by the Coca-Cola Co., the world’s biggest soft-drink maker, according to data compiled by Bloomberg.

Restructuring Charges

The one-time items included a A$48 million writedown of goodwill in the SPC Ardmona business and A$98 million in restructuring charges as it cut the value of inventory to more realistic selling prices.

“Our business is in the best shape ever,” Terry Davis, managing director, told an investor briefing in Sydney. Coca- Cola Amatil’s level of profit margin, which was 21 percent in its Australian drinks business during the year, “are still seen as the benchmark performance levels across the global Coke system”, he said, referring to the group of companies that bottle Coca-Cola’s concentrates.

Total revenue increased 6.3 percent to A$5.18 billion during the period, while cost of goods sold -- the amount spent on cans, bottles, soft-drink concentrate and other product inputs -- was little changed at 56 percent of trading revenue.

Earnings before interest and tax in Australia rose 3.3 percent to A$627 million as the company increased sales volumes in the face of discounting by Asahi Group Holdings Inc., the Australian bottler of Pepsi and Schweppes.

Indonesian Growth

Indonesia and Papua New Guinea posted a 17 percent rise in Ebit to A$103 million, with volumes up 10 percent on the back of strong performances from Minute Maid Pulpy juice, the company said.

Sales from the unit would exceed A$1 billion during the year, Davis said, and it would take up about A$200 million of the A$420 million the company plans to spend on capital projects this year.

Ebit from New Zealand and Fiji fell 12 percent to A$70 million as New Zealand experienced a cool, wet summer and local retailers reduced stock levels.

To contact the reporter on this story: David Fickling in Sydney at dfickling@bloomberg.net

To contact the editor responsible for this story: Anjali Cordeiro at acordeiro2@bloomberg.net

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