Profits are fizzing out for the first half of the year for soft drink manufacturer and supplier Coca-Cola Amatil, who posted a 27.8 per cent drop in net profit to $153.6 million.
Coca-Cola Amatil attributes the massive slump to $80 million loss relating to its SPC Ardmona business in Victoria. The massive writedowns are on the assets and inventory of the SPCA fruit and vegetable processing business.
The losses are forcing the company to close its SPC Ardmona plant at Mooroopna in Victoria and consolidate manufacturing into the two sites at Shepparton and Kyabram, also in Victoria. Around 150 jobs will be lost as a result.
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CCA’s Group Managing Director Terry Davis said, “We remain firmly committed to maintaining our manufacturing base in Australia and by proactively restructuring the SPC Ardmona business we believe we can lower its cost base to help regain its competitive position in the market place. The strengthening of the Australian dollar over the past three years has regrettably led to a significant increase in the volume of cheap packaged fruit and vegetable products being imported into Australia."
Still, Coca-Cola Amatil delivered net profit after tax of $234.1 million for the first half, before significant items, representing an increase of 5.5 per cent on the 2010 half year result, or an increase of around 6.5 per cent before the impact of currency translation on offshore earnings.
CCA’s Group Managing Director Terry Davis said, “I believe that the operating performance in the first half has been solid given the business has had to manage external headwinds, as well as the cycling of a very strong first half result in 2010. The combination of devastating natural disasters in Australia and New Zealand, rapid increases in resin costs and the impact of translation on offshore earnings from the stronger Australian dollar reduced our net profit growth by around 5% for the half.”