Coca-Cola Amatil is set to write down the value of its assets by up to $190 million, largely related to its Indonesian subsidiary.
“These expected impairments are non-cash accounting adjustments and we remain very confident about the long-term prospects for our Indonesian business,” said Coca-Cola Amatil group MD Alison Watkins.
The write down – to be in the range of $160 million to $190 million – will be included in the first-half year accounts, due for release next month.
Meanwhile, Watkins expressed confidence in the company’s prospects at home after noting an improvement in trading conditions in its major markets since Covid-19-related restrictions were eased.
While a detailed trading update will be provided during the first-half results announcement next month, the group’s trading volumes were down about 9 per cent last month, leaving second-quarter sales down by about 23 per cent.
“The rate of improvement has varied greatly across geographic markets, due to differences in the approach, timing and extent of lifting of lockdown restrictions,” the company said in a stock-exchange filing.
In New Zealand, where significant easing of restrictions has taken place, Amatil’s June volumes increased by about 4 per cent year on year in June, but in Australia, they were down by about 3 per cent.
And in Indonesia, where Covid-19 infection rates remain high, June sales were down about 23 per cent, despite improving “significantly” on the April and May declines.
However Coca-Cola Amatil says margins have been impacted by consumers moving away from on-the-go channels to grocery stores due to Covid-19 restrictions.
“Within this environment, the company has continued its focus on disciplined management of costs and cashflows, with each of its businesses making good progress in recalibrating future resourcing requirements, for actioning as required.”
“We nevertheless remain cautious, given the reinstatement of lockdown measures from July in Melbourne and the rising Covid-19 infection rate in Indonesia,” said Watkins.
“The impacts of the pandemic are continuing to evolve with the situation fluid across all of our markets. I am proud of the way the Amatil team has responded to the unprecedented challenges we have faced and am confident that we have a clear path forward, which coupled with our ample liquidity, strong balance sheet and solid credit ratings, positions us well, to emerge from the pandemic as a stronger, better business.”