Automotive Holdings Group has announced a series of write-downs and restructuring expenses totalling $264 million as it adjusts to tougher conditions in both its automotive and trucking businesses.
AHG's interim results, to be released later this mnth, will include impairments of $147 million to its franchised automotive business and $79 million to its refrigerated logistics business.
Managing director John McConnell said the write-down in its automotive arm was due to soft retail market conditions across the sector.
“The combined effects of regulatory changes to automotive finance and insurance, the negative wealth sentiment in property prices, particularly in Sydney and Melbourne, and the increased and wider tightening of lending practices have all affected the automotive sector,” he said.
Mr McConnell said the write-down to the refrigerated logistics business was a result of the company combining four brands into a single unit, but added the outlook for the division was “positive”.
The company will also record a $38 million charge to cover the restructuring or closing of “several” dealerships it purchased in better market conditions.
"A number of acquisitions and investment decisions made in the last decade reflected where the market was at the time," he said.
"In the current market a number of these investments are not delivering the earnings required to support the carrying value."
In July, China-based HNA Group called off a proposed $280 million purchase of AHG’s refrigerated trucking arm.
AHG has 39 dealerships in Western Australia.
Shares in AGH were down 8.7 per cent to trade at $1.62 each at 12.30pm AEDT.
