Today Coca-Cola Amatil Ltd (ASX: CCL) released its half-year results to the market for the period ending 31 December 2018 with its net profit after tax (NPAT) down 37.3% to $279 million.

Coca-Cola Amatil is one of the largest bottlers of non-alcoholic and alcoholic ready-to-drink beverages in the Asia-Pacific region.

Impairment of SPC

A few days before releasing their half-year results to the market, Coca-Cola Amatil released an announcement explaining they believed it was prudent to impair the remaining carrying value of SPC on their books due to “the wide range of offers received… and the inherent uncertainty of the financial outcome in the sale process”.

As a result of this, Coca-Cola Amatil has since classified SPC under “discontinued operations” and excluded it from “underlying earnings” for the half-year.

Coca-Cola Amatil’s Key Results

All references to underlying below exclude SPC, with Coca-Cola Amatil reporting:

  • Underlying EBIT from continuing operations down 6.5% to $634.5 million
  • Underlying NPAT from continuing operations down 6.5% to $388.3 million
  • Including the SPC impairment, the statutory NPAT was down 37.3% to $279 million
  • Final dividend of 26cps franked to 50%

Management Perspective

Coca-Cola Amatil’s Managing Director Alison Watkins said it was a transition year for the company with earnings impacted by:

  • Planned investment in the Accelerated Australian Growth Plan
  • The introduction of container deposit schemes
  • Economic factors in Indonesia
  • Operational challenges in PNG.

Future Outlook

The company guided for more pain ahead as they don’t expect any growth until 2020, with 2019 being the “second year of a two-year transition phase for the Group”.

Rask Perspective

Coca-Cola Amatil has always had big shoes to fill with its bigger brother The Coca-Cola Company (NYSE: KO) proving an amazing investment for Warren Buffett. However, I think it seems Coca-Cola Amatil will always struggle to fill those shoes for many reasons, as it has demonstrated in recent times.

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Disclaimer: Any information contained in this article is limited to general financial/investment advice only. The information has not taken into account your specific needs, goals or objectives, so please consider consulting a licenced and trusted adviser before acting on the information. Please read The Rask Group’s Financial Services Guide (FSG) for more information. This article is authorised by Owen Raszkiewicz of The Rask Group, which is a corporate authorised representative No. 1264179 of Strawman Pty Ltd (ACN: 610 908 211) (AFSL: 501 223).