CCA calls for tariffs on tinned food
09/05/2013 12:00
BEVERAGE major Coca-Cola Amatil has called for emergency tariffs on tinned tomatoes after a market shift to cheap imports led the company to downgrade earnings forecasts.
Speaking at the company's annual meeting in Sydney, managing director Terry Davis said sales to grocery retailers had a very difficult start to the year due to high levels of discounting from arch-rival Pepsi, which was selling for less than half the price of Coke.
Meanwhile, earnings from fruit processing unit SPC Ardmona had taken a hit from retailers who were importing tinned tomatoes and private-label packaged fruit by retailers.
"Many of these imports are being sold at levels below the cost of Australian-produced packaged-fruit offerings and should the retail trading outlook not improve in the second half, SPC earnings are expected to lower group earnings by 2-3 per cent for 2013," Mr Davis told shareholders.
CCA is now forecasting earnings before interest and tax to decline by 8-9 per cent before one-off items, with a return to earnings growth in the second half resulting in a flat EBIT result for the full year. CCA shares fell $1.52, or 11 per cent, to $12.93 in trading yesterday.
Mr Davis had not previously made any concrete forecasts about this year's earnings outlook, saying only that he expected further revenue and earnings growth this year when delivering the company's annual profit result in February.
He revealed yesterday that CCA had written to Canberra to request a temporary tariff on all imported canned tomatoes and processed fruit to give the domestic industry some "breathing space".
Under the World Trade Organisation rules on anti-dumping trade measures, governments can impose limits on imports when there is a sudden influx of cheap products that could result in damage to domestic producers. Agriculture Minister Joe Ludwig confirmed he had received the letter but said there was a lengthy assessment process before the government could respond.
Only two applications for emergency tariffs have been made prior to CCA's, neither of them successful.
After the meeting, Mr Davis dismissed recent criticisms from Coles managing director Ian McLeod over the high price of locally made products, including Coca-Cola, when compared with the same product in Asian markets. He noted that local labour costs were up to 20 times higher than those in Southeast Asia, while rent and other overheads were also greatly increased.
"Of course they are cheaper," he said. "Do we want an environment where we pay our workers $1.50 an hour? Of course we don't."
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