The Coca-Cola Amatil Ltd (ASX: CCL) share price is pushing higher on Thursday after the release of an update.
In morning trade the beverage giant’s shares are up 2.5% to $8.72.
What did Coca-Cola Amatil announce?
Coca-Cola Amatil has been finalising its first half financial results and is currently assessing the carrying value of each of its businesses.
In light of the adverse impact of COVID-19 on its trading performance and the prescribed approach to assessing carrying values, management advised that it expects to incur non-cash impairments in the range of $160 million to $190 million post tax in its half year accounts.
Management revealed that these impairments relate predominantly to its Indonesian business and will not impact its debt facilities. This is because these facilities do not have any financial covenants.
The final outcome of the impairment review is subject to external audit review and final board approval.
The company’s Group Managing Director, Alison Watkins, commented: “These expected impairments are non-cash accounting adjustments and we remain very confident about the long-term prospects for our Indonesian business”.
Coca-Cola Amatil revealed that it has experienced an improvement in trading conditions in its major markets during June. This reflects the gradual easing of COVID-19 related restrictions.
Trading volumes across the group in June 2020 were down approximately 9% compared to June 2019. This resulted in a second quarter 2020 volume decline of approximately 23% compared to the prior corresponding period.
How are its businesses performing?
Management advised that the rate of improvement has varied across different markets.
In New Zealand June volumes increased approximately 4% on June 2019 and in Australia monthly volumes declined approximately 3% year on year.
Over in Indonesia things haven’t been as positive. This market, where COVID-19 infection rates remain high, monthly volumes declined approximately 23% on June 2019.
Ms Watkins said, “It is encouraging to see the improvement in our Volumes as the pandemic restrictions were lifted across a number of our markets. It has also been pleasing to see that the strength of our brands and strong sales capabilities continue to drive market share gains in Australia and New Zealand. We nevertheless remain cautious, given the reinstatement of lockdown measures from July in Melbourne and the rising COVID19 infection rate in Indonesia.”
“The impacts of the pandemic are continuing to evolve with the situation fluid across all of our markets. I am proud of the way the Amatil team has responded to the unprecedented challenges we have faced and am confident that we have a clear path forward, which coupled with our ample liquidity, strong balance sheet and solid credit ratings, positions us well, to emerge from the pandemic as a stronger, better business,” she concluded.
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