Metcash profits down
But company back paying out dividends
FOOD and grocery wholesaler Metcash has resumed dividends after lowering debt but has posted a lower full-year profit and says competition will keep it under pressure for the rest of the current financial year.
The IGA and Foodland supplier also made a surprise announcement that chief executive Ian Morrice will retire in 2018, after five years in the role. Metcash’s net profit of $171.9 million for the year to April 30 was down 20.6 per cent from the previous year.
“It was a fairly challenging year with unprecedented competitive pressures,” Mr Morrice told reporters yesterday.
Sales rose 5.4 per cent to $14.12 billion, helped by a 53rd trading week in the year and revenue from the Home Timber and Hardware business that it acquired from Woolworths in October, 2016.
The profit figure included $23 million in costs related to the Home Timber & Hardware acquisition as well and restructuring costs associated with Metcash’s “working smarter” savings program, while the previous year’s profit had included gains from the sale of its automotive business. Excluding the one-off costs, underlying profit rose 9.3 per cent to $194.8 million.
Metcash, along with larger rivals Woolworths and Coles, has faced intense price competition in food and groceries from discount chain Aldi, and tough economic conditions in WA, which has been hit by the resource sector downturn. Metcash CEO Ian Morrice says the company has posted a lower full-year profit
Sales in Metcash’s main foods division rose 0.6 per cent to $9.18 billion, while earnings remained flat at $180 million.
Excluding the 53rd week, food sales were down 1.3 per cent and Metcash said like-forlike retail sales across the IGA network increased just 0.1 per cent. Liquor sales were up 3.5 per cent to $3.33 billion, while hardware sales jumped 52 per cent to $1.61 billion, helped by the Home Trading and Hardware acquisition.
Citi analysts said there were positives to take out of the result.
Metcash shares rose 11¢, or 4.8 per cent to $2.30 each yesterday.
Metcash, which hasn’t paid dividends since mid-2015, said it is restarting payouts at 4.5¢ a share after reducing net debt by nearly $195 million during the year.