IGA wholesale supplier Metcash has declared a $384.2 million full-year loss on massive write-downs, and announced the sale of its automotive division.

The company foreshadowed the loss when it recently announced $638.8 million worth of write-downs, reflecting a lower value of its assets in a highly competitive grocery market.

The company said its underlying pre-tax earnings of $325.1 million were in line with estimates released in December 2014, however its earnings are well down on last year's $390.3 million.

Excluding the one-off write-downs, Metcash said it would have posted a $169.2 million profit.

Most of the write-downs are in the company's core food and grocery division, which the company has blamed on rising competitive pressures - as Coles and Woolworths battle for market share with each other, and newcomer Aldi and soon Lidl - which have led to falling supermarket prices and profit margins.

Metcash is currently investing in renovating some IGA stores to increase sales of the groceries it supplies, but says a substantial return from that reinvestment will not be seen until at least 2017.

Elsewhere in the company, the liquor division managed an increase in pre-tax earnings despite a decline in sales, hardware saw an 11.3 per cent rise in sales, while automotive sales were up 17.8 per cent to $256.4 million.

Auto sale to underwrite grocery investment

However, Metcash today announced the sale of its relatively successful automotive division for $275 million.

The company expects to receive net proceeds after tax of around $210 million, which it says will be used to reduce debt and invest in its remaining grocery, liquor and hardware businesses.

Metcash Automotive, which includes the Autobarn, Autopro and Midas brands, is being bought by automotive parts supplier Burson Group.

Metcash says all employees will continue their employment with the business and it expects no disruption to customers, franchisees and suppliers.

The transaction is expected to complete in July 2015.

Metcash had already flagged that it will pay no dividend this year and intends to pay no dividends again in 2016.