Coca Cola Amatil expects A$165 million from Pacific Beverages sale as SPC restructure continues

Posted by AFN Staff Writers on 19th December 2011

Coca Cola Amatil is expecting to make around A$165 million in profit from the sale of its shares in the joint venture beverage manufacturer Pacific Beverages to other shareholder, multi-national brewer SABMiller.

Pacific Beverages brands include Peroni, Miller Genuine Draft and Pilsner Urquell.

Coca Cola Amatil expects to record a profit of around A$60 million for 2011, comprising the above-mentioned profit less around A$105 million in the extra costs associated with the restructuring of fruit producer and packager SPC Ardmona.

Coca Cola Amatil will sell its half of shares in Pacific Beverages to SABMiller for A$305 million. SABMiller previously operated in Australia only through Pacific Beverages, the joint venture it had with Coca-Cola Amatil. SABMiller has since acquired the Foster’s Group.

Under the sale agreement, Coca Cola Amatil will be restrained from selling, distributing or manufacturing beer in Australia for two years until the end of 2013. However, Coca Cola Amatil is seeking to expand its alcohol business interests in Australia and elsewhere.

Coca Cola Amatil now has the opportunity to acquire the whole or part of the SABMiller’s Australian spirit and ready-to-drink spirit business, the Australian non-alcoholic beverages business and the Fijian Brewery and Fijian liquor and Fijian non-alcoholic beverage business, subject to due diligence and regulatory approvals.

Coca Cola Amatil is expecting to undertake due diligence during the first quarter of 2012 and it expects to pay between A$100 and A$180 million for the brands.

Coca Cola Amatil will continue to distribute SABMiller’s premium beer brands in Australia and New Zealand until 16 January 2012, being the completion date of the sale of Coca Cola Amatil’s shares in Pacific Beverages to SABMiller.

Coca Cola Amatil’s Group Managing Director Terry Davis said, “While in the short term we cannot compete in beer in Australia, we are not restricted in other markets and we would expect to be back in the beer business in Australia in early 2014.”

Coca Cola Amatil expects five per cent profit growth for second half of 2011

Mr Davis said that Coca Cola Amatil expects to deliver net profit growth of around five per cent for the second half of 2011, with reported net profit expected to be around 0.5 per cent lower due to the “translation impact on offshore earnings”.

Mr Davis said, “While trading conditions have been difficult, with lower levels of consumer spending persisting from the first half, there has been an improvement in momentum since the Reserve Bank of Australia’s announced cuts to official interest rates with solid growth in volumes since the beginning of November 2011.

“We still have an important two weeks of trading ahead of us, and while we have had a solid start to the Christmas season across most of Australia, cool and wet weather has affected NSW trading,” he said.

Coca Cola Amatil will release its results for the full year 2011 on Wednesday, 22 February 2012.