Risk of goodwill impairment due to deterioration in the beverage business earnings outlook
First written in FY2019-Q2. 2 of 4 entries say "Materialised", first in FY2019-Q2. Latest entry: FY2022.
Coca-Cola Bottlers Japan Holdings moved to the "Worse" side of this theme in 2019, 5 years before the typical company in this theme (2024).
The whole theme swung hardest in 2024: 36 of 89 companies on the "Worse" side.
25 other companies' latest entry also says "Mitigated".
- FY2022MitigatedAnnual report
「For the beverage business, the recoverable amount exceeded the carrying amount of ¥127,714 million in the consolidated fiscal year. However, an impairment loss could arise if the discount rate exceeds 7.2% or the growth rate falls below negative 1.1%.」
For the beverage business goodwill impairment risk, the recoverable amount exceeded the carrying amount in fiscal 2022, and no impairment loss was recognized, while sensitivity to the discount rate and growth rate continues to be disclosed. - FY2019MaterialisedAnnual report
「As a result, an impairment loss on goodwill of ¥61,859 million was recognized in the consolidated fiscal year.」
Following the beverage business outlook falling below the business plan assumed at the time of acquisition, a ¥61,859 million goodwill impairment loss was recognized for the fiscal year. The impairment test used a pretax discount rate of 5.4% and a growth rate of 0.5%, and also indicated the possibility of additional impairment if the discount rate exceeds 5.6% or the growth rate falls below negative 0.1%. - FY2019-Q3Quantification of impairment sensitivityAnnual report
「For the beverage business, the impairment test conducted in the consolidated second-quarter accounting period indicated that an increase of 0.1% in the discount rate would result in an impairment loss of ¥12,382 million. A 0.1% decrease in the growth rate would result in an impairment loss of ¥10,653 million.」
For the beverage business goodwill impairment risk, the company quantified additional impairment amounts arising from changes in the discount rate and growth rate. In addition to the ¥61,859 million impairment loss already recognized, it disclosed sensitivity showing an additional loss of ¥12,382 million if the discount rate rises by 0.1% and ¥10,653 million if the growth rate falls by 0.1%. - FY2019-Q2MaterialisedAnnual report
「The impairment arose in the beverage business. As the earnings outlook under the medium-term management plan through 2024, announced on 7 August 2019, was expected to remain below the business plan assumed at the time of the acquisition of Coca-Cola Bottlers Japan Co., Ltd. (formerly Coca-Cola East Japan Co., Ltd.), the recoverable amount of the cash-generating unit to which the goodwill belonged was assessed under the medium-term management plan. As a result, an impairment loss on goodwill of ¥61,859 million was recognized in the consolidated cumulative second-quarter period.」
The beverage business outlook fell below the business plan assumed at the time of acquisition, resulting in a ¥61,859 million goodwill impairment loss. Separate from the goodwill impairment previously recognized in the healthcare and skincare businesses, the risk was also realized in the beverage business.