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Wednesday 20

June, 201811:35 PM



Metcash to take $352m hit after SA blow

Metcash to take $352m hit after SA blow

Metcash will record a $352 million impairment in its full-year results after a South Australian supermarket decided not to renew its contract.

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By AAP 06.06.2018 11:54 AM

Metcash is facing a full-year 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 on Wednesday.

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 cents, or 4.3 per cent, to an eight-month low of $2.64.

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 full-year 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.

Total sales, including tobacco, to Drakes Supermarkets in SA were about $270 million in the 12 months to April 30.

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