AUS: Coca-Cola Amatil: SPC Ardmona closure reports "mistaken"
SPCA claims it was damaged by illegally dumped canned foods
Coca Cola Amatil has denied speculation it is to close Australian canned food business SPC Ardmona despite it booking another writedown of A$404m on the division, which hit profits at the Coke bottler.
In a statement issued by the firm today (18 August), Coca Cola Amatil said reports it would shut the struggling business were "mistaken".
The company said it was confident in "the long-term prospects of SPCA" and pointed to a A$100m joint investment package with Victoria's state government, announced last week. Victoria pledged A$22m, with Coca-Cola Amatil investing the rest.
"If we did not believe in the future of the company CCA would not have made the significant investment of A$78m," said Coca-Cola Amatil MD Terry Davis said.
Coca-Cola had asked Australia's federal government for a grant of A$25m but Canberra refused. Prime Minister Tony Abbott reportedly said Coca-Cola Amatil should be able to fund any restructuring needed at the business.
Coca-Cola Amatil issued its latest writedown of A$404m on SPC Ardmona today alongside its annual results.
The charge meant Coca-Cola Amatil posted an 82.5% fall in net profit to A$79.9m for 2013.
Coca-Cola Amatil said the A$404m reflected a complete write-off of all the goodwill left in SPC Ardmona of A$277m, a A$39.7m writedown in the value of brand names and an A$87.3m charge covering writedowns in inventory and property.
Reflecting on SPC Ardmona's performance in 2013, Coca-Cola Amatil said the division's volumes and profits fell. It pointed to the strength of the Australian dollar against the South African rand and the euro, which, it said, "materially impacted" the company's competitiveness against imports.
SPC Ardmona has been vocal in its complaints over the impact imports have had on its sales. The company claimed importers were dumping products in Australia and asked the country's anti-dumping body to investigate.
Earlier this month, Australia's anti-dumping commission found 56% of Italian tinned tomatoes were dumped into the market. The body imposed a tariff penalty on the suppliers, which SPC Ardmona said should "improve [its] competitive position".
Share prices in Coca Cola Amatil closed down 5.32% at A$11.22 today (18 February).
Coca-Cola Amatil (CCA) wishes to clarify its position regarding the future of SPC Ardmona.
Reports that “CCA has signalled that it could close SPC Ardmona” are mistaken.
CCA is confident of the long-term prospects for SPCA, and will invest capital of $78 million over the next three years. The Victorian Government committed to an investment of $22 million over three years.
CCA’s intention with this investment is to ensure the long term viability of the business in Victoria.
CCA’s Managing Director Terry Davis said he has confidence in the future of SPC Ardmona.
“We are very comfortable with the conditions applied to the $22m grant by the Victorian Government. If we did not believe in the future of the company CCA would not have made the significant investment of $78million.”
He praised the Victorian Government for its support. The co investment of $100 million will enable CCA to commit to increased investment to support the business over the longer term.
Mr Davis also praised increased support from retailers and the overwhelmingly positive response from Australian consumers for the brands.
Background: Last Thursday CCA and the Victorian Government announced a new $100 million investment plan to assist the future of SPC Ardmona and the Goulburn Valley. CCA will invest $78 million into the business and welcomed the decision by the Victorian Government to invest $22 million over three years.
The Victorian Government’s participation is conditional upon the entering into of formal legal documentation which will set out the investment milestones upon which the financial assistance will be provided and include the condition of employment being maintained at a minimum level of 500 Full Time Equivalent (FTE) employees for three years, and the $78 million contribution by CCA to the overall project cost. A further requirement will be the refund of all payments made under this agreement should SPCA cease business operations at Shepparton within five years of the agreement with the Victorian Government.
Today CCA announced a writedown of the carrying value of SPC Ardmona by $404 million.
Original source: Coca Cola Amatil
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