Coca-Cola Amatil will close its manufacturing unit in South Australia in a move that would affect 180 employees and contractors.
The company, which reported a 37.4 per cent fall in full-year profit to $246.1 million due to non-cash impairment at its fruit packaging company SPC, said it will instead invest $90 million on a facility in Queensland.
In early trade, Coca-Cola Amatil shares were up 6.8% to $10.59.
The moves to realign manufacturing will save $20 million a year from 2020 beyond the $100 million savings targeted over the next three years, it said. Coco-Cola blamed the South Australian units location in the Adelaide suburb of Thebarton, dated infrastructure and expensive logistics. The unit will close in 2019.
“We need to modernise and invest in new capability across our supply chain to maintain our competitiveness in the market,” Managing Director Alison Watkins said in a statement.
Manufacturers in South Australia are reeling from the withdrawal of federal government support for the state’s automobile industry, where General Motors Co. is forecast to close Adelaide’s last car plant this year after half a century of car-making. A 2014 National Institute for Economic and Industry Research report estimates that the end of the car industry will cost the state 24,000 jobs.
The beverage giant said it had reviewed its operations across Australia and concluded it should increase production in Queensland, where the additional investment will increase technology and automation. Some manufacturing from Adelaide will shift to Kewdale in West Australia, Moorabbin in Victoria and Northmead in New South Wales, it said.
The Adelaide factory produces glass bottles, fruit juice, dairy products and some alcoholic beverages.