Woolworths flags $1.57 billion write-down in first half

(Source: Bigstock)

Woolworths has flagged weaker performance of its New Zealand food operations and Big W businesses in the first half of the current fiscal year.

The supermarket chain forecasts its New Zealand unit to book $65.7 million (NZ$71 million) in earnings before interest and taxes, down 42 per cent from a year ago.

This includes about $12 million of costs associated with the transformation of Woolworths New Zealand.

The supermarket chain also expects a $1.48 billion non-cash impairment following a review of the New Zealand food segment’s outlook for the next three years, representing a write-down against the current goodwill balance of $2.1 billion.

“Our confidence in the potential of Woolworths New Zealand and our transformation plan remains unchanged,” said Woolworths CEO Brad Banducci.

“While the short-term performance has been impacted by a variety of factors and the speed of improvement remains uncertain, we are seeing early positive signs from our Kiwi customers as our transformation gathers momentum.”

In addition, Woolworths anticipates a loss of $209 million from its 9.1 per cent stake in Endeavour Group.

Following Endeavour’s demerger from Woolworths, the supermarket chain said that it will recognise its stake in the hotels, alcohol and gaming facilities operator as a financial asset measured at fair value.

Meanwhile, Woolworths said that the performance of its Australian food and PFD segments remained solid during the period.

The group estimates unaudited EBIT before significant items of $1.68 billion to $1.7 billion during the six months, up 2.8 per cent to 3.8 per cent from the previous year.

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