Coca-Cola Amatil continues to feel “significant volatility” across all markets as a result of the COVID-19 pandemic, with the group volume of beverages sold down by 33 per cent in April.
Widespread outlet closures and restricted trading were cited as key impacts, as well as changes in buying patterns in the grocery channel.
Amatil’s On-The-Go volume in April was down around 55 per cent on the pcp, and Convenience and Petroleum Volume also declined by 20 per cent.
Group managing director Alison Watkins said since 1 April, Amatil has traded through tighter COVID-19 lockdown restrictions through the traditionally peak Easter and Ramadan trading periods.
“With many customers remaining closed or operating at significantly reduced capacity, there has been unprecedented disruption to trade,” said Watkins.
“While revenue since the start of April has broadly declined in line with volume, the impact on our Group margin percentages has been much greater, reflecting marked shifts in channel and package mix, particularly in Australia.
“This adverse impact has been compounded by the loss of scale in Indonesia resulting in a pronounced impact on EBIT, despite cost savings being realised through lower marketing spend and other initiatives including leave utilisation and reduced recruitment and discretionary spend.”
Watkins said that the performance of its non-alcoholic ready-to-drink category needs to be “taken in the context of the sector as a whole”, as the high margin State Immediate Consumption and hotel, restaurant and catering (HORECA) channels transitioned to lower margin packs and channels such as grocery and quick-service restaurants, “with Amatil growing its market share during this period”.
“As COVID-19 restrictions have started to be lifted in May, we are seeing signs of modest improvement with volume decline rates reducing in the first three weeks of May to approximately 20 per cent down on the pcp,” said Watkins.
“To ensure we are well positioned to support customers and leverage opportunities as restrictions are eased, we have commenced repositioning team members back into the OTG channel, having temporarily redeployed them into the Grocery channel in mid-March.”
Amatil has a “clear path forward to weather the current conditions”, said Watkins, noting that the fourth quarter trading conditions will be imperative to the company’s FY2020 financial performance. It will focus on “protecting our workforce, supporting customers and tightly managing our costs, credit and capital”.
“Looking ahead, while it is encouraging to see lockdown restrictions gradually being eased and some green shoots of improvement in trading conditions emerge, the reality is that economic recovery will take time and uncertainty remains. We anticipate we will have a clearer view that we can share with the market at our 2020 half year results in August,” said Watkins.
Recycling plant in Indonesia gets green light
Amatil’s Indonesian operations have signed a heads of agreement with long-term packaging partner Dynapack Asia to build a bottle-to-bottle grade polyethylene terephthalate (PET) recycling facility.
Amatil and Dynapack will collaborate on the proof of concept phase, which will take into consideration the plant’s economic feasibility, size, scale and location, end-to-end requirements and potential integration into each company’s value chains.
“This joint venture represents a real environmental step-change in our move towards a more sustainable approach to plastic and a circular economy by bringing low-quality PET waste back to virgin-quality, food-grade PET, which also echoes The Coca-Cola Company’s ‘World Without Waste’ vision,” said Coca-Cola Amatil Indonesia president director Kadir Gunduz.
The new site has the potential to reduce the amount of new plastic resin by 25,000 tonnes each year in 2022, supporting Indonesia’s National Action Plan to achieve a 70 per cent reduction in the nation’s marine plastic debris by 2025.
