Crushing SPC blow for Coca-Cola Amatil

JANE HARPER
JANUARY 30, 2014
HERALD SUN
COCA-Cola Amatil has flagged further writedowns in its ailing fruit processing arm SPC Ardmona after the Federal Government refused to throw the business a $25 million lifeline.
The soft drink giant says the government’s decision is “disappointing” and will trigger a “material review” into the value of the Victorian business, which has been buffetted by a glut of cheap imports.
SPC’s parent company had been seeking an injection of $25 million from each of the Federal and State governments.
It had plegdged to invest $90 million upgrading technology and products at the Shepparton cannery in return for the grants.
But Industry Minister Ian Macfarlane said Coca-Cola, which chalked up a $215 million profit for the six months to June, did not need a bailout.
“We believe Coca-Cola with a very, very healthy balance sheet is able to provide that money from within its own resources,” Mr Macfarlane said.
Coca-Cola said it would announce the extent of writedowns around the business at the group’s full-year results on February 18.
“The government decision is disappointing in light of the fact that SPC Ardmona had presented a solid business case for a one-off co-investment,” Coca-Cola managing director Terry Davis said.
Company accounts reveal Coca-Cola has shouldered about $400 million worth of impairments, write downs and other costs over the past two years, largely linked to SPC.
Industry groups urged the group to continue with its bid to rebuild the SPC business despite the government’s decision, which was announced after the market closed.
Richard Clancy, executive director of industry policy at the Victorian Employers’ Chamber of Commerce and Industry, called on the group to stay the course.
“We hope Coca-Cola Amatil will continue to invest in SPC Ardmona and that both the federal and state governments remain focused on relieving the business community of as much unnecessary cost and regulation as possible,”
A spokesman for the Australian Food and Grocery Council said the debate had brought the challenges facing the food processing sector into sharp focus.
“The challenge remains to get the settings right to kickstart the massive investment needed if we are to capitalise on the unprecedented food export opportunities into Asia,” the council said.
Coca-Cola shares fell 0.9 per cent on Thursday, closing at $11.79 ahead of the Government’s announcement.