The Coca-Cola Amatil Ltd (ASX: CCL) share price is in the spotlight today after the bottling giant released its full-year FY20 results.
Coca-Cola Amatil is the Australian distributor and rights holder to the famous Coca-Cola brand, which is ultimately owned by the US parent Coca-Cola Company (NYSE: KO).
It’s been a busy six months for Coca-Cola Amatil after receiving a takeover offer from Coca Cola European Partners (CCEP) in late October 2020. The initial offer price was set at $12.75, but CCEP increased its offer earlier this week to $13.50 per share.
CCEP declared this would be its best and final offer. The revised bid implies an enterprise value of $11.1 billion and represents a 26% premium to the last traded price of Coca-Cola Amatil shares before the initial offer was announced.
Coca-Cola Amatil has unanimously recommended shareholders to vote in favour of the revised offer.
Now, onto the full-year results.
Coca-Cola finishes the year on a strong note
Coca-Cola Amatil emphasised its FY20 performance reflected the impacts of COVID-19 on all business segments.
Total volumes declined by 8.4% on the prior corresponding period (pcp) to 617.8 million unit cases, while trading revenue fell 6.1% to $4.8 million. The company noted that both volumes and revenues improved markedly in the second half as COVID-19 restrictions eased to varying degrees across its geographic markets.
Recognising the challenges posed by the pandemic, the company focused on managing costs throughout the year. To this end, it delivered $140 million of costs savings, which includes $20 million from direct marketing expenditure.
Further down the income statement, Coca-Cola Amatil achieved ongoing net profit after tax (NPAT) of $340.3 million, down 13.6% on the pcp. But including non-trading items such as impairment charges in Indonesia, statutory NPAT fell by 51.9% to $179.9 million.
The company ended the year with $1 billion cash on its books and $2 billion in debt.
Coca-Cola’s dividend
Coca-Cola Amatil declared a fully franked final dividend of 18 cents per share, down from the 26 cent final dividend declared in the prior year.
In line with the agreed scheme implementation deed with CCEP, the value of the final dividend will be deducted from the $13.50 offer price in the event that the transaction goes ahead.
Management commentary & outlook
Commenting on the results, managing director Alison Watkins said: “Our ability to tightly manage costs and capex and grow market share in our major markets throughout such a challenging year, demonstrates the strength and resilience of our business model. Looking ahead we are well progressed in implementing our Fighting Fit program which is expected to deliver additional cumulative savings of $85 million by FY22.”
As for outlook, Ms Watkins said the business remains focused on continuing to drive market share gains, growing its e-commerce presence and delivering cost savings in the near-term.
“We are confident that our enhanced competitive position together with our strong balance sheet, ample liquidity, robust cashflows and solid credit rating position us well financially and operationally to emerge a stronger, better business,” Ms Watkins concluded.
Now what?
At the time of writing, Coca-Cola Amatil shares are changing hands at $13.37, around 9.6% below the offer price.
The Australian Foreign Investment Review Board approved the potential takeover in late January, but the transaction still requires approvals from the court and the New Zealand Overseas Investment Office.
Coca-Cola Amatil expects to send out a scheme booklet to shareholders in mid-March.
To keep up to date this February reporting season, check out Rask Media’s ASX reporting season hub for all the latest news and analysis.
