Australian grocer Woolworths has announced that it will recognize a substantial write-down of its New Zealand food business in its upcoming half-year results. The company will account for a non-cash impairment of 1.6 billion New Zealand dollars (US$980 million), with expected earnings in New Zealand declining by 42% compared to the prior year. Woolworths attributes this write-down to a weaker medium-term market outlook and acknowledges the need for time to implement a transformation plan for the unit to reach its full potential.
Despite the challenges faced in New Zealand, Woolworths reassured investors that its main Australian food business has continued to perform well. As a result, the company expects growth in its overall earnings before interest and tax (Ebit) to be within the range of 2.8% to 3.8%, excluding significant items, for the half year. The projected Ebit before significant items is expected to be between 1.682 billion Australian dollars (US$1.11 billion) and A$1.699 billion.
In addition to its New Zealand write-down, Woolworths has also announced a A$209 million loss associated with its investment in Endeavour, a drinks and hotel company, due to an accounting change.
Woolworths will release its full half-year results on Feb. 21.