Australia’s Woolworths to take $1 billion charge against NZ business By Reuters

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Australia’s Woolworths to take $1 billion charge against NZ business By Reuters


© Reuters. FILE PHOTO: People walk past a Woolworths supermarket in Sydney, Australia, June 16, 2020. REUTERS/Loren Elliott/File Photo

(Reuters) -Woolworths on Monday said it will record a non-cash impairment of NZ$1.6 billion ($974.40 million) in its 2024 interim results because the supermarket chain’s New Zealand business faces challenges amid a weak market outlook.

The retailer also said it will record a A$209 million loss ($137.35 million) after a review of its 9.1% stake in local alcohol retailer Endeavour Group because the company feels it no longer holds “significant influence” over the ASX-listed peer.

“The Group will derecognise its equity accounted investment in Endeavour Group and recognise an investment in Endeavour Group as a financial asset, measured at fair value,” Woolworths said in a statement.

The New Zealand impairment will result in a write-down against the company’s current goodwill balance of NZ$2.3 billion, the company said.

The country’s largest grocer had acquired wholesaling and supermarket assets of Foodland’s New Zealand business in 2005 in a deal valued at A$3.38 billion.

“It is prudent to review the carrying value of the goodwill on the balance sheet that was booked as part of Woolworths Group’s original acquisition of Foodland’s New Zealand business in 2005,” the firm said in a statement.

The New Zealand business has been seeing effects of a weaker medium-term market outlook and organisational transformation initiatives yet to reach full potential, the company said.

It expects to report first-half earnings before interest and tax (EBIT) of NZ$71 million for the New Zealand segment, 42% below what was recorded a year ago.

Woolworths said it sees first-half unaudited EBIT between A$1.68 billion and A$1.70 billion, slightly higher than the A$1.64 billion recorded the year ago.

The rise in the group’s EBIT is expected on the back of solid financial performance by its Australian Food business and food distributor PFD Food Services.

($1 = 1.6420 New Zealand dollars)

($1 = 1.5209 Australian dollars)



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