Metcash has posted a full year loss of $384 million with its IGA division getting beaten down by intense competition from major supermarkets.
Food and grocery business earnings in the 12 months to the end of April were down more than 26% to $216.8 million.
Metcash wrote down goodwill and other assets of $640 million, mainly related to the group’s supermarket business.
All the major supermarkets are reporting increased competition and pressure on profits. Woolworths third quarter sales slumped 2.1% to $14.95 billion and Coles is reporting intense price pressure in the market.
Metcash says its result was due to increased competitive pressures, ongoing price deflation and a change in consumer behaviour. People are buying more fresh and private label goods, areas in which Metcash is under represented.
In response, Metcash has a price match initiative, is improving its fresh food offer and is expanding its private label goods.
The company is also accelerating key initiatives and reducing its cost base.
Metcash expects difficult trading conditions to continue into 2016.
The company also announced the sale of its automotive business to the auto parts group Burson for $275 million.