Coca Cola-Amatil has recorded an 82.5 per cent fall in full year profit after making $404 million in writedowns on its SPC Ardmona fruit and vegetable processing business.
CCA reported a net profit of $79.9 million for the year to December 31, 2013, down from $457.8 million a year earlier.
Before the SPC Ardmona writedown is taken into account, the soft drink bottler’s after-tax profit was $502.8 million.
Trading revenue for the year was down 1.2 per cent to $5.04 billion.
CCA group managing director Mr Terry Davis said SPC had been hit by cheap imported fruit and vegetables while local drink sales had also suffered.
“The difficult trading conditions for the Australian beverage business in the grocery channel, combined with the impact on SPC Ardmona earnings from imported private label products and the significant slowdown in the PNG economy led to a reduction in earnings for 2013 of 6.9 per cent,” Mr Davis said in a statement.
The Victorian government last week announced a $22 million funding package for SPC after a similar funding call to the federal government was knocked back.
The SPC Ardmona writedown comprised $277 million in goodwill, a $39.7 million reduction in the value of brand names and $87.3 million in inventory and equipment value.
Mr Davis said the writedown was unavoidable despite restructuring efforts to reduce costs because of a “perfect storm” of economic factors, including a high Australian dollar that allowed cheap imports to flood domestic markets and “decimate” export markets.
Mr Davis, presenting his last results ahead of his retirement, flagged a further review of CCA’s operations, saying the outlook in Australia remained concerning.
“We remain concerned by the generally weak consumer confidence and spending environment and the continued softness of the carbonated beverage category in the grocery channel,” he said.
He was more positive about the key Indonesian market, saying volumes of beverages sold was expected to grow 10 per cent in 2014, although inflation was a concern.
Mr Davis said the beer and cider business, which CCA re-entered in December 2013, was expected to add one per cent to earnings growth in 2014.
CCA announced a final dividend of 32 cents, franked at 75 percent, taking total dividends for the year to 58.5 cents.