Two large Australian companies have written down the value of their New Zealand operations as Covid-19 hit sales, margins and costs.
Primary steelmaking operations at Glenbrook steel mill near Auckland may cease, its Australian owner warns. Photo: RNZ / Rebekah Parsons-King
Steelmaker Bluescope, which operates the Glenbrook steel mill south of Auckland and Pacific Steel, confirmed it would take a $A197 million ($NZ215m) writedown of the business, and would post a near A$6m operating loss.
Last month, Bluescope signalled the future of the New Zealand operation was under review as it struggled to cope with lower prices, the Covid-19-related closure, and high energy and raw material prices.
It has already closed one production unit and said further restructuring would see it cut loss-making products and change the business which might result in "a substantial number of roles being made redundant".
Bluescope said the restructuring was expected to cost between $A30-50m.
"In the event that the improvements are not achieved, business may shift to external supply of products, and primary steelmaking operations at Glenbrook may cease."
It said demand since the lifting of restrictions had been robust and it would continue to make Colorsteel products.
JB Hi-Fi profits short circuit
Meanwhile, Australian electronics retailer JB Hi-Fi has written down the value of its New Zealand operation after falling sales and profit margins dented its earnings.
The group has taken a $25.6m charge as it downgraded the value of some assets.
"The group is focused on continuing to improve performance in New Zealand, however, as a result of past performance and the ongoing uncertainty arising from the current environment, in financial year 2020 the group reviewed the carrying value of certain JB Hi-Fi New Zealand assets," the company said in a filing to the Australian Stock Exchange.
The New Zealand business had a $1.9m operating loss as its sales for the year fell by nearly 6 percent to $222.8m, reflecting the closures forced by the level 4 lockdown.
Online sales grew by 53 percent and made up 9 percent of all sales and its cost of doing business edged lower.
The company said it received $3m in wage subsidies in New Zealand.
It said sales for July were up by 9 percent on last year, but the re-emergence of Covid-19 had forced the closure of seven stores in the Auckland region.