May 13, 2019 / 11:28 PM / a year ago

UPDATE 1-Australia's Automotive Holdings cuts profit forecast, flags write-downs

(Adds details on review of unit, background on sector)

May 14 (Reuters) - Australian car dealer Automotive Holdings Ltd cut its full-year net profit forecast on Tuesday, citing challenging volumes in the automotive sector, and flagged that potential write-downs could further crimp profit.

The company, which last week backed a A$836 million ($580.1 million) takeover bid by larger rival AP Eagers, now expects operating net profit after tax (NPAT) of about A$50 million for the 2019 financial year.

In February it had forecast operating NPAT of A$52 million to A$56 million and started a review of its Refrigerated Logistics business.

The car dealer is looking into the carrying value of receivables in prior years as well as this financial year. The review might result in write downs in receivables that may impact its full year outlook, it added.

AP Eagers, Automotive’s biggest shareholder, made its bid in an environment of weak consumer spending that has hit retail volumes and margins.

Automotive said it does not expect the results of the review and cut to its profit forecast to impact AP Eagers’ takeover.

$1 = 1.4411 Australian dollars Reporting by Nikhil Kurian Nainan in Bengaluru; Editing by Richard Chang and Stephen Coates

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