Largely attributed to its struggling SPC Ardmona business, CCA reported $98.5 million in writedowns in what Managing Director Terry Davis said was a “disappointing performance.”
CCA’s net profit of $459.9 million was also down from $591.8 million at the same time last year.
The difficulties of its SPC Ardmona business continued on from its previous report in December 2012 in which Mr Davis also said the “high Australian dollar” and “cheaper supermarket labels and imports” were to blame.
“The ongoing impact of the high Australian dollar on the competitiveness of the SPCA business, the significant deflation of fresh fruit prices and the growth of imported grocery private label packaged fruit and vegetables has necessitated a second half significant write-down in SPCA assets and goodwill,” Mr Davis said.
The restructuring of the SPC business continues with the consolidation of fresh fruit manufacturing into Shepparton. Restructing of the international business as well as other initiatives also continues to reduce the cost of doing business in the SPC Ardmona division.
By the end of the fruit picking season, CCA expects inventory levels to be back to “optimal levels.”
Volume and EBIT growth in Australia of 3.3 per cent was delivered against what CCA called a “backdrop of a weak consumer spending and very poor weather in the first quarter.” Despite “sustained aggressive competitor discounting” in the second half, market share increased in sparkling beverages and EBIT margins were maintained above 20 per cent.
Mr Davis said that CCA “remained concerned” about the “generally weak consumer spending environment which has persisted for the last two years.”
CCA’s growth in alcohol earnings
Overall, alcohol, food & services earnings increased by 2 per cent due to a solid result from spirits and alcoholic ready-to-drink beverages, offset by a decline in SPC Ardmona earnings.
While CCA dominates the Australian non-alcoholic beverage market, progress was also made for the expansion of its alcoholic beverage business areas. CCA has strengthened its brand portfolio including an agreement to form a beer manufacturing joint venture with Casella in Australia that will commence in December 2013.
CCA also announced that it would begin distributing Rekorderlig cider in 2014.
Internationally, CCA acquired the Foster’s Fiji brewery and distillery (renamed Paradise Beverages (Fiji)), and commenced distribution of premium beer for Grupo Modelo, Carlsberg and Molson Coors in Fiji, Papua New Guinea and the Pacific Islands.
New Zealand hit hard by “bad weather”
The New Zealand business delivered what CCA described as a “disappointing result” with a decline in volume and earnings. CCA experienced a poor start to 2012 as New Zealand recorded one of the coolest and wettest summers on record and the New Zealand economy and consumer confidence “remained very soft” throughout the year. In addition, volumes were impacted by a significant reduction in stock held by major customers as they focused on more efficient working capital management.
