Pacific Brands Ltd., maker of the Hard Yakka and King Gee workwear labels, wrote A$242 million ($219 million) off the value of its industrial clothing unit, blaming a decline in the country’s mining investment boom.
The maker of the Bonds and Berlei underwear brands was driven to a half-year loss of A$219 million by the writedown, which removed all goodwill and brand value from the unit making high-visibility clothing, overalls, and boots used on construction, industrial and mining sites. A withdrawal of Australian troops from Afghanistan also hit the business.
Australia’s economy has slowed as a decline in resources investment hits sectors that have been buoyed by the construction of new mines and gas export projects. The country’s unemployment rate jumped to its highest level in more than 10 years in January amid plans by General Motors Co., Toyota Motor Corp. and Alcoa Inc. to shutter plants, while miners BHP Billiton Ltd. and Rio Tinto Group have closed mines.
“The pain being felt in the Australian manufacturing, construction and resource sectors is flowing through to businesses like ours,” Chief Executive Officer John Pollaers said in a regulatory statement today. Many of the workwear unit’s products are “now marginally profitable driven by aggressive pricing and over capacity in the market.”