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CCA said it had previously called out soft trading conditions in Indonesia, while a collapse in the value of the Indonesian Rupiah against the US dollar to the lowest levels in more than 20 years had also hurt its performance.
CCA said that it would review the value of its Indonesian business ahead of its full-year results in February, but flagged it did not necessary follow that it would have to record an impairment on the business simply because its joint-venture partner did.
This was because the Coca-Cola Company’s carrying value for the business was based on its investment made in 2015, and accounted for the business as an equity-accounted investment, while CCA valued the business based on investments it made since 1992 and was consolidated in its accounts.
JP Morgan badyst Shaun Cousins said that CCA’s financial performance in Indonesia had been subdued for some time, “with revenue growth elusive despite significant market share opportunities in large categories”.
CCA said that the Coca-Cola Company’s valuation of the Indonesian operations exceeded its own carrying value of the business, while Morgan Stanley said the valuation of the business was about double its own estimates.
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