The company that operates IGA supermarkets across Australia, Metcash, has announced a $352 million impairment after it lost a major customer in South Australia..
The company says its financial statements for the year to April will recognise a non cash $352 million impairment to goodwill and other net assets in the Supermarkets and Convenience pillar.
The impairments, $318 million of goodwill and other intangibles, and $34 million of other net assets, follow a year-end review of the carrying value of its assets.
Metcash shares were down 3% in early trade today.
The review took into account last month’s announcement that Drakes Supermarkets will not be making a commitment to have its supermarkets in South Australia supplied from Metcash’s proposed new distribution centre in the state.
Metcash’s annual results will be released on June 25.
The company, facing increasing competition from discount players such as Aldi, says current year earnings are expected to be in line with last year.
Metcash managed to lift profit 24% to $92.9 million in the first half despite a slump in sales at its IGA supermarkets. The company’s IGA retail network recorded a decline in like for like sales of 1.1%.
