TOKYO -- Japan Post Holdings is discussing a write-down of as much as 400 billion yen ($3.66 billion) for the year ended March 31 to remove goodwill stemming from the acquisition of an Australian logistics unit from its balance sheet.
Japan Post snapped up Australia's Toll Holdings in May 2015 for 620 billion yen (around $5 billion at the time), paying well over book value in expectation of strong future earning power. This drove up the group's goodwill to a dizzying 386 billion yen as of December. Japan Post's board will decide how to handle the massive goodwill next week.
The group is currently writing down 20 billion yen per year for the acquisition on a 20-year schedule. But an earnings slump at Toll has diminished the unit's value further. Nor has Japan Post profited from collaboration to the degree envisioned, due to its lack of expertise running overseas logistics facilities. The plan now is to take one large loss for fiscal 2016, per accounting rules, an executive told government sources Friday.
Japan Post's group net profit for fiscal 2016 is estimated at 320 billion yen. Logging a loss of up to 400 billion yen could hand the group its first net loss since Japan began privatizing the postal system. But this would also dispose of a long-term drain on earnings -- a move the market could appreciate, some say.