(Reuters) – Woolworths on Monday took a non-cash impairment charge of NZ$1.6 billion ($974.4 million) in its 2024 interim results, as the supermarket chain's New Zealand operations face challenges amid a weak market outlook. announced that it would be accounted for.
The company also reassessed its 9.1% stake in local liquor retailer Endeavor Group for A$209 million ($1.5 million) after the company felt it no longer had “significant influence” over its ASX-listed peers. The company also said it would record a loss of $37.35 million.
Woolworths said in a statement: “The Group will derecognize its investment in Endeavor Group for equity accounting purposes and will recognize its investment in Endeavor Group as a financial asset measured at fair value.”
The company said the New Zealand impairment would result in a write-down of its current goodwill balance of NZ$2.3 billion.
The country's largest grocer acquired the wholesale and supermarket assets of Foodland's New Zealand business in 2005 in a deal valued at A$3.38 billion.
“It would be prudent to review the balance sheet carrying amount of the goodwill recorded as part of Woolworths Group's acquisition of Foodland's New Zealand operations in 2005,” the company said in a statement.
The company said its New Zealand operations had not yet experienced the full impact of the weak medium-term market outlook and organizational change initiatives.
It expects first-half earnings before interest and tax (EBIT) for the New Zealand unit to be NZ$71 million, 42% below the same period last year.
Woolworths said it expects unaudited EBIT for the first half to be between A$1.68 billion and A$1.7 billion, slightly higher than A$1.64 billion in the same period last year.
The group's EBIT growth is expected on the back of the strong financial performance of its Australian food business and food distributor PFD Food Services.
($1 = 1.6420 New Zealand Dollar)
($1 = 1.5209 Australian Dollar)
(Reporting by Rishabh Chatterjee in Bengaluru; Editing by Leslie Adler and Lisa Shoemaker)
