Coca-Cola Amatil (CCA) management obviously decided that with the stockmarket tanking and all shares under pressure, that it was better to reveal some bad news than hide it and wait until later in the year.
So amid the company’s interim profit statement yesterday came the news of an $80 million cost of restructuring its food business, SPC Ardmona.
So, naturally that resulted in a modest 5.5% rise in earnings being turned into a 27.8% slump after tax and one-off items.
The shares fell to a 52 week low of $10.04 in yesterday’s mad sell-off in the morning, before it jumped 1.6% or 17c to $10.69.
The company reported yesterday that it had delivered net profit after tax (NPAT) of $234.1 million, before significant items, representing an increase of 5.5% on the 2010 half year result, or an increase of around 6.5% before the impact of currency translation on offshore earnings.
The profit rise before the restructuring costs came on a smaller 3.3% rise in trading revenue for the half year to $2.21 billion.
Reported NPAT, which is after significant items, declined after including an $80.5 million after tax significant item relating to the restructuring of the SPC Ardmona business.
That revamp will see Coca Cola Amatil consolidate three SPCA Ardmona (SPCA) manufacturing sites in Victoria into two.
CCA will close the SPCA manufacturing site at Mooroopna in northeastern Victoria.
It blamed a fall in SPCA’s earnings as it exited some unprofitable export and domestic private-label activities.
In addition, the stronger Australian dollar continued to reduce SPCA’s competitiveness against cheap imported brands and private-label categories in Australia.
As a result, there had been a 35% fall in export sales at SPCA in the past year.
The consolidation of SPCA manufacturing into the facility at Shepparton will cost 150 jobs and $10 million to $15 million in redundancies and relocation costs, Coca-Cola Amatil said.
It had reviewed the SPCA business and found that SPCA had excess manufacturing capacity.
‘‘The review also found that, as a consequence of the stronger Australian dollar, SPCA is currently not competitive in many export markets and has seen domestic grocery private-label contracts move to imported products,’’ CCA said in yesterday’s statement.
‘‘As a result, excess inventory that needs to be sold below cost has been written down to its net realisable value.’’
CCA managing director Terry Davis said CCA remained committed to maintaining its manufacturing base in Australia.
He said a restructuring of SPCA would lower its cost base so it could regain its competitive position in the marketplace.
Mr Davis said CCA expected to generate stronger earnings growth in the second half of the current financial year, although the direction of trading conditions in Australia remained uncertain as consumers deal with higher food, fuel and utility costs and interest rates.
The job losses and write-downs didn’t impact the company’s ability to lift payout to shareholders.
Interim dividend was lifted to 22c a share from 20.5c for the first half of the 2010 financial year.
That’s always a sign of management and board confidence about the outlook.
Hearing products group and exporter Cochlear Ltd has posted a solid 16% rise in full year profit but nervy investors ignored that.
The shares lost more than 4.5% to an 18 month low of $63.05 at one stage, before recovering in the afternoon comeback to end at $65, down $1.03.
Investors didn’t think the result was good enough to send the shares into the green, even though Cochlear made it clear it is now in a much stronger financial position than a year ago.
And that was also despite it telling the ASX the company now was cash positive, with no debt, that the final dividend had been boosted to $1.20 a share (partly franked) from $1.05, and that net profit rose to a record $180.1 million, up 16%.
That was on a 10% rise in revenue to $809.6 million, and up 17% in constant currency.
The company said Cochlear implant unit sales rose 17% to 24,661 units.
Cochlear said it was well positioned for long term sustainable growth and the outlook remained positive.
CEO Chris Roberts said, "This result was achieved in difficult global financial conditions and highlights the multiple growth drivers the business delivers across products and geographical spread".
He said the business was strengthened and readied for "ongoing growth" in the areas of technological innovation, further improvements in manufacturing and supply chain processes.
The company said that productivity gains in manufacturing and supply chain were again a feature of the latest result.
"Gross margin to revenue of 71.8% in F11 compares with a gross margin to revenue of 71.2% five years ago in F07. This is despite the AUD strengthening 25% over the USD and 19% over the Euro during this period."
Cochlear said it continued to expand globally, setting up a subsidiary company in Panama to support distribution in Latin America. Full year distributio
