Coca-Cola Amatil Delivers Dividend Despite Dropping Into The Red

By Glenn Dyer | More Articles by Glenn Dyer

Like Santos, Coca Cola Amatil has attempted to keep faith with shareholders after a difficult six months by agreeing to a reduced interim dividend.

The company will pay a first-half dividend of 9 cents per share, down from 25 cents a year ago.

That’s despite reporting an $8.7 million statutory net loss for the June half, as COVID-19 hit sales with the closure of restaurants, cafes, and pubs and the group took a $101.2 million impairment of its Indonesia division.

That impairment loss and weak sales were highlighted in a trading update for the six months released in late July.

That softened investors up for the full result yesterday and that forewarning helped shares bounce more than 4% to $9.27 in a market was in the red all day.

Keeping faith with the small dividend no doubt helped buttress the share price. the shares rose 4.6% to $9.28.

The loss followed a $168 million statutory profit for the first six months of 2019, but the comparison is invidious.

June 30, 2020 half was first hit by the impact of east Coast bushfires which damaged holiday trading and sales into resort areas in NSW, Victoria, and parts of southeast Queensland.

And that was followed by the dramatic onslaught of COVID-19 and the lockdowns which halted much of the sales activity in the company’s big growth (and most profitable) sector of selling into small shops, cafes, restaurants, vending machines, convenience stores, and similar small business.

COVID-19 and associated lockdown also damaged sales and trading in its Indonesia business, hence the write-downs, while sales also weakened in new Zealand for the same reason.

All that led to a 9.2% slide in half-year revenues to 9.2% to $2.185 billion.

Earnings before interest, tax, depreciation, and amortisation (EBITDA) fell more than 19% to $370.5 million because of the loss in sales to the higher-margin consumer channels (sales were steadier to the big supermarkets which are less profitable).

“We experienced unique, market-wide challenges this half, ranging from Australian bushfires and Indonesian floods through to the COVID-19 pandemic which impacted all our businesses,” said Coca-Cola Amatil CEO, Alison Watkins.

“Despite these challenges, the resilience of our business was demonstrated by our agile response in addressing changes in channel mix and consumer behaviour, enabling us to grow our market share in key product categories.

“Our financial performance under these challenging conditions, in particular our strong cash realisation, is a testament to the strength of our business and the tenacity of our people, partners, and customers,” she said.

Glenn Dyer

About Glenn Dyer

Glenn Dyer has been a finance journalist and TV producer for more than 40 years. He has worked at Maxwell Newton Publications, Queensland Newspapers, AAP, The Australian Financial Review, The Nine Network and Crikey.

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