No plan for Coca-Cola to refranchise Africa unit, Beverage giant to retain majority stake

The Coca-Cola Company has recently announced that it would continue maintaining its majority stake in Coca-Cola Beverages Africa for the foreseeable future.

The US beverage giant earlier wanted to refranchise the unit as part of its global plan to divest its manufacturing and distribution assets to focus on the main beverage business and boost margins. The companies already had discussions with a number of potential partners to refranchise Coca-Cola Beverages Africa (CCBA). Even Coca-Cola Hellenic Bottling Company (HBC) and rival Coca-Cola European Partners were previously seen as potential partners for the unit.

"Coca-Cola Beverages Africa is a very important part of the Coca-Cola system, and we see great opportunities to create even more value. While we remain committed to the refranchising process, we believe it's in the best interests of all involved for Coca-Cola to continue to hold and operate CCBA," Coca-Cola President and Chief Operating Officer, Brian Smith said.

In reclassifying CCBA's results into continuing operations, Coca-Cola expects the following:

• The company will provide reclassified prior year financial information prior to the second quarter earnings release.
• Depreciation and amortization for CCBA will be reinstated, per accounting guidelines. Coca-Cola estimates depreciation and amortization expense for 2018 of approximately $400 million on a comparable basis.
• With the reclassification, Coca-Cola does not expect an impact to its 2019 organic revenue and comparable EPS growth guidance. The company expects an increase in its 2019 guidance for cash from operations of approximately $400 million and an increase in capital expenditures of approximately $400 million.
• CCBA's results will be reported as part of the Bottling Investments Group segment.

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