Coca-Cola Amatil has said it will slash 150 jobs in Victoria as its profits slumped nearly 28 per cent in the first six months of 2011.
CCA’s first half profit was badly hit as it was forced to restructure its struggling SPC Ardmona (SPCA) business in Victoria.
The soft drink supplier today reported a 27.8 per cent drop in net profit for the six months ended July 1, 2011, to $153.6 million.
The result included $80.5 million in writedowns on the assets and inventory of the SPCA fruit and vegetable processing business.
The company said the high dollar had led to a significant increase in imported “cheap packaged fruit and vegetable products” making the company less competitive in many export markets.
Greater Shepparton Council Mayor Geoff Dobson said the closure would have “quite a big impact” on the community.
“SPC has been part of our community for a long time,” Mr Dobson told AAP.
“It’s been through a lot of changes and it’s got to remain competitive and viable and today’s announcement … is part of that.
“SPC has put measures in place to maintain its competitiveness but I guess the Australian dollar the way it has been, has been a hard one to tackle.”
He said factory staff were likely to be the hardest hit, with admin staff more likely to be offered alternative positions within the company.
CCA’s net profit before significant items rose 5.5 per cent to $234.1 million but was constrained by the effects of natural disasters in Australia and New Zealand over the key summer period, the high value of the Australian dollar, subdued consumer spending
and some higher raw material costs.
CCA managing director Terry Davis described the first half result as “solid” amid the toughest operating environment that he had seen for many years.
CCA will close its SPCA plant at Mooroopna in Victoria and consolidate manufacturing into the two sites at Shepparton and Kyabram, also in Victoria.
CCA said SPCA’s earnings had suffered as the stronger Australian dollar affected its competitiveness against cheap, imported brands and domestic grocery private-label contracts moved to imported products.
A review of SPCA had showed that it had excess manufacturing capacity.
The consolidation of SPCA manufacturing will cost $10 million to $15 million in redundancies and relocation costs.
“We remain firmly committed to maintaining our manufacturing base in Australia and by proactively restructuring the SPC Ardmona business we believe we can lower its cost base so it can regain its competitive position in the market place,” Mr Davis said.
Mr Davis said CCA expected to generate stronger earnings growth in the second half of the current financial year, but the retailing environment would remain challenging.
Mr Davis also said there was still much uncertainty in the community surrounding the implications of the costs to consumers flowing from the federal government’s carbon tax.
“Until we cycle through all that I believe consumers will continue to be cautious with their spending,” Mr Davis said.