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”.
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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.
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By GlobalDataThe 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).
