Coca-Cola Amatil slices dividend as profits fall 50pc

Drinks and bottling giant Coca-Cola Amatil has said it will pay shareholders a lower-than-expected dividend after its underlying profit was hit by more than $60 million in costs over the last six months of 2020.

Coca-Cola told investors at its full-year results on Thursday its dividend for the year would come in at 18 cents per share, well below the 25 to 26 cents analysts were expecting and far below its 2019 dividend of 26 cents.

Coca-Cola Amatil group managing director Alison Watkins. Credit:Peter Braig

“The final dividend amount was set to allow available franking credits to be returned to Australian shareholders,” chief executive Alison Watkins said.

“The franking credits represent additional value to those shareholders who are able to realise a tax benefit from those franking credits.”

The business’ statutory profit for the 2020 calendar year came in at $179.9 million, a 52 per cent fall on the prior year thanks to $210.5 million worth of impairments and company redesign costs, much of which the business flagged at its half-year results in August.

The company’s dealmaking with Coca Cola Europe, which has agreed to acquire Coke Australia for nearly $10 billion, cost the business $7 million over the year. The final dividend will be deducted from Coke Europe’s $13.50 per share offer price for the business.

Stripping out these one-off costs, net profit fell 13.6 per cent to $340.3 million, in line with analyst expectations and the trading update Coke provided in January.

Total revenue fell 6.1 per cent to $4.7 billion and volumes dropped 8.4 per cent, though these results were better than the company had originally expected as Christmas trading beat expectations.

Coca-Cola Amatil’s Indonesian division weighed significantly on the results as the COVID-19 pandemic remains out of control in the country. Volumes fell 16.2 per cent and earnings dropped 36 per cent to $61.3 million.

Ms Watkins said trading in Australian markets had continued to be strong into the new year though performance remained volatile in Indonesia and the Pacific.

“In the immediate term we remain focused on continuing to drive market share gains, growing our
presence in e-commerce and delivering our …. cost efficiencies,” she said.

“We are confident that our enhanced competitive position together with our strong balance sheet, ample liquidity, robust cash flows and solid credit rating position us well financially and operationally to emerge a stronger, better business.”

Amatil provided no material update on the progress of its acquisition by Coca-Cola Europe, with additional detail expected to be sent to shareholders by mid-March.

More to come

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