Metcash heading into red after $352m write-down
Grocery wholesaler Metcash is heading for a full-year loss after writing down the value of its operations by $352 million.
The company, which supplies hundreds of independent IGA supermarkets, announced the write-down on Wednesday morning, comprising of a $318 million impairment against goodwill and other intangible assets, and $34 million against other assets in its supermarket business.
The impairments took into account last week’s revelation that its largest South Australian customer Drakes Supermarkets would terminate its relationship with Metcash and start sourcing its own groceries, as well as “weakness in the Western Australian economy and the ongoing intensity of competition in the sector”.
Metcash said at the time its supermarket and convenience arm’s earnings for 2018 would be in line with last financial year.
But the $352 million non-cash write-down, which will be recorded as a significant item, swamps Metcash’s bottom line profits of $173 million last year and $218 million in 2016. Sydney Morning Herald – Read more…