Samoa Breweries' decline hits Australian HQ
Coca-Cola Amatil, one of five bottlers of the Coca-Cola soft drink worldwide, and among the Pacific’s biggest beverage manufacturers, said the declining value of its Samoan operations hurt its first-half 2020 profits.
In first-half results published to the Australian Stock exchange on Thursday, the bottler posted an AUD$8.7 million loss, a drop of more than AUD$150 million year-on-year.
The Sydney-headquartered, AUD$6.8 billion company by market capitalisation, generates nearly two-thirds of its revenue from sales in Australia.
But it also has extensive interests in the Pacific region in which it operates as Paradise Beverages.
Paradise trades locally as Samoa Breweries and bottles drinks such as Coca-Cola, Vailima and the Moni beverages, employs a total of 160 people at its Apia plant.
Coca-Cola Amatil's annual report to the stock market said that it had written down the value of its Paradise Beverages businesses by just under $AUD17 million, something that was a significant contributing factor to the company’s overall loss.
But the loss does not reflect a decline in the business’ performance overall, rather a writedown by the company’s accountants in the valuation of the businesses caused by the coronavirus-led economic downturn.
That decline has been driven primarily by the drop in Samoa (and Fiji’s) economies associated with declining international tourism.
In its statement to the markets Coca-Cola Amatil made clear it still had faith in the long-term prospects of its Pacific operations and stressed that the declines in business value were primarily “non-trading” (e.g. accounting) losses, not declines in sales and were not expected to be long-term.
“Amatil incurred a non-cash impairment of $16.8 million (post tax, pre non-controlling interests share) of the Paradise Beverages Fijian and Samoan businesses in 1H 2020,” the company told the Australian Stock Exchange in a statement.
“The impairment was a non-cash accounting adjustment and classified as a non-trading item in our financial statements, and we remain very confident about the long-term prospects for the Paradise Beverages Fijian and Samoan businesses”
The Samoa Breweries plant is responsible for the annual production of some 8.5 million litres of beer and 6.5 million litres of soft drink.
Most beer is produced for local consumption but a proportion of about 10 per cent is exported to American Samoa, New Zealand and the Cook Islands.
Paradise Beverages employs some 550 people across the Pacific when including its Fiji arm, which is behind brands such as Fiji Gold and Bounty Rum.
The loss was attributed by the company to the business conditions created by the coronavirus but primarily due to non-trading losses (which relate to the company’s corporate or currency operations, as opposed to its retail performance).
The group’s revenue fell by a total of 9 per cent on an annualised basis.
For the first half of 2019, the company had reported a first half net profit of AUD$168 million.