Global soft carbonated drink maker, Coca-Cola Company has disclosed intention to retain majority stake in Coca-Cola Beverages Africa (CCBA), its bottling business in Africa, after initial plans to re-franchise the unit.
With this, Coca-Cola will start to present the financial statements of CCBA as part of its Bottling Investments Group Segment effective second quarter of 2019.
CCBA has been accounted for as a discontinued operation since Coca-Cola emerged the major investor almost two years ago.
“Coca-Cola Beverages Africa is a very important part of the Coca-Cola system, and we see great opportunities and create even more value,” Brian Smith, Chief Operating Officer and President, Coca-Cola Company said.
Speaking further, “While we remain committed to the refranchising process, we believe it is in the best interests of all involved for Coca-Cola to hold and operate CCBA.”
The Coca-Cola chief disclosed that the drink maker held wide consultations with prospective buyers for its African bottling unit, including Coca-Cola HBC and Coca-Cola European Partners.
The global drink maker initially planned to refranchise the unit to enable it prioritize on its beverages segment while offloading its manufacturing and distribution assets.
The company’s current goal is to expand sales revenue of its beverages unit, and this became important after its shares dipped following the release of its 2018 full year results.
In reclassifying CCBA’s results in its continuing operations, Coca-Cola expects that depreciation and amortization for CCBA will be reinstated in line with accounting guidelines.
The company forecasts depreciation and amortization expenses for 2018 of roughly $400 million on comparable basis. With the reclassification, Coca-Cola does not expect an impact on its 2019 organic revenue and comparable EPS growth guidance.
The drink forecasts 4 percent growth in sales revenue in 2019, same with rival Pepsi that envisages 400 basis points increase in top-line.
CCBA was formed in 2016 through the mix of the African non-alcoholic ready-to-drink bottling interests of SABMiller Plc, the Coca-Cola Company and the Gutsche Family Investment.
AB InBev later acquired SABMiller and reached an agreement to transfer AB Inbevs 54 percent stake in CCBA to Coca-Cola. This 2017 transaction made Coca-Cola the major investor in CCBA.
Coca-Cola Company manufactures, markets and distributes soft drink concentrates and syrups to retailers and wholesalers in the United States and internationally.
The company’s shares gained 1.34 percent to US$49.25 at Wednesday mid-day trading on the New York Exchange, and have returned 4 percent since the start of the year. Its arch-rival Pepsi has advanced 18 percent year-to-date.
Israel Odubola
