METCASH TO TAKE $352M HIT AFTER BIG SA BLOW
METCASH is facing a fullyear loss after it announced a $352 million hit due to the loss of one of its South Australian supermarket customers.
The IGA and Foodland supermarkets supplier said last week that Drakes Supermarkets would not sign up in SA beyond June next year, but only outlined the size of the impact yesterday.
Metcash will record a $318 million non-cash impairment against goodwill and other intangibles, plus a $34 million asset writedown, when it announces its results on June 25.
Shares in Metcash, which said the impairment was also related to weakness in the WA economy and intense competition across the sector, fell as much as 12¢, or 4.3 per cent, to an eight-month low of $2.64.
It recovered some ground later to close the day down 6¢ at $2.70.
The impairment is more than Metcash made in the whole of the 2017 financial year. But it said the new impairments were non-cash and had no impact on its debt facilities or compliance with banking covenants.
The food and grocery wholesaler last year reported a 20.6 per cent fall in fullyear net profit to $171.9 million, and flagged continued pressure on food sales amid tough market conditions.
Metcash said last week Drakes would not commit beyond the end of the parties’ current South Australia agreement despite the supplier’s plans for a new distribution centre.