Coca-Cola Amatil has recorded a net profit after tax drop of 51.9 per cent to $179.9 in what will be its last as a listed company before its acquisition by Coca-Cola European Partners (CCEP).
The profit drop was largely due to one-off costs including the $120.8 million reported in 1H20, largely due to the impairment of Indonesia. Non-trading items (NTIs) for the full year were $160.4 million. 2H20 non trading items of $39.6m primarily related to the implementation of the Fighting Fit cost initiatives in Australia and Group Office.
- improvement in trading performance in Australia and New Zealand in 2H20, in line with easing of COVID-19 lockdown measures;
- FY20 volumes down 8.4% (2H down 5.4%) and trading revenue down 6.1% (2H down 3.3%) on FY19;
- tight cost management delivered $140 million of savings in FY20 of which approximately $60 million are permanent;
- ongoing EBITDA down 9.0% (2H up 0.1%) and ongoing EBIT2 down 13.9% (2H up 3.2%);
- ongoing NPAT of $340.3 million down 13.6% on FY19;
- statutory NPAT of $179.9 million down 51.9% on FY19 inclusive of non-trading items (NTIs) which were largely due to the Indonesia impairment; and
- net debt reduction of $289.4m on FY19, reflecting a significant improvement in working capital
Amatil group managing director Alison Watkins said there had been strong trading in 4Q20 in ANZ. Watkins said the company focused on managing costs through last year’s tough trading conditions. It delivered $140 million in cost savings, including $20 million in direct marketing expenditure. Roughly $60 million of these savings would be permanent, she said.
“While our Indonesian business continued to face challenging trading conditions, contributed to by COVID-19 infection rates remaining high and tough macro-economic conditions prevailing, it was able to deliver positive EBIT and a strong cashflow for the year.
“Our tight management of costs across the Group partially offset the adverse impact of COVID-19 on trading activity. Our financial performance under these challenging conditions, with our strong cash realisation and reduction in net debt, is a testament to the strength of our businesses and the tenacity of our people, partners and customers,” Watkins said.
Its Fighting Fit program is expected to deliver additional cumulative savings of $85 million by FY22.
Volumes were down 8.4 per cent in FY20, which reflects a much better second half of the year. 1H20 saw volumes down 11.6 per cent, compared to 2H20 at 5.4 per cent. Full year trading revenue was down 6.1 per cent on pcp with performance varying markedly across Amatil’s geographic markets due to differences in COVID-19 infection rates and restrictions on mobility.
The board also declared a fully franked final dividend of 18.0 cents per share (cps). Under the CCEP scheme of arrangement, the value of the final dividend for 2020 will be deducted from the total cash consideration per share of $13.50 offered by CCEP.
Watkins said: “The final dividend amount was set to allow available franking credits to be returned to Australian shareholders. The franking credits represent additional value to those shareholders who are able to realise a tax benefit from those franking credits.”
Performance also varied widely across channels and products. In terms of channel performance, restrictions on trading and the shift to at-home consumption due to COVID-19 saw the grocery channel end the year up 4.3 per cent on FY19. Convenience & petroleum was up 0.4 per cent and on-the-go (OTG) dropped 16.4 per cent.
Restrictions led to a shift in product mix, with demand for multi-serve PET and multi-pack cans increasing while demand for immediate consumption offerings fell.
These channel and product shifts resulted in margin compression in 1H20, which improved in 2H20 as restrictions eased, the company said.
From a category perspective, Amatil performed strongly during the year in the cola category, delivering 1.9 per cent volume growth compared to the pcp.
Energy was the standout category for the year, delivering 7.9 per cent volume growth year on year led by growth of 31.8 per cent in the Monster Energy brand.
The drop in frozen (down 16.7 per cent on FY19), and still water (down 15.3 per cent on FY19) reflected reduced consumer mobility.
Performance across states reflected COVID-19 and ensuing lockdown measures. The hardest hit States were Victoria and New South Wales where FY20 volumes were down 8.6 per cent and 7.1 per cent respectively on FY19. Queensland volume was down 0.7 per cent, while the best performing states were Western Australia up 1.9 per cent and South Australia up 1.3 per cent.
Watkins said that in looking ahead, it was encouraging to see the roll-out of the COVID-19 vaccines. But the uncertainty as to the timing and impact across various markets remained, as did uncertainty around trading conditions with the pandemic still progressing in Indonesia and the reduction of government stimulus in Australia.