Metcash spirits soar

The company that supplies stores under the Independent Grocers of Australia banner — Metcash — has had a surge in first-half earnings despite a drop in sales.

THE company that supplies stores under the Independent Grocers of Australia banner has had a surge in first-half earnings despite a drop in sales at its supermarket business.

Grocery wholesaler Metcash yesterday posted a net profit of $92.9 million for the six months to October.

The IGA and Foodlands supplier said food sales dropped 1.4 per cent from the same period last year – to $4.36 billion – due to fierce competition from Woolworths and Coles, plus the aggressive expansion of Aldi in South Australia and Western Australia.

But net profit still rose from $74.9 million a year earlier on a 7.6 per cent rise in total sales, driven by Metcash’s liquor business and Home Timber & Hardware chain.

The group announced it was paying a fully franked interim dividend of 6¢ a share, compared with nothing a year ago. Shares in Metcash spiked in the wake of that revelation, closing 9 per cent, or 25¢, stronger yesterday at $3.

Sales at the company’s liquor operations rose 5.1 per cent to $1.64 billion.

But food sales dropped. Chief executive Ian Morrice, who will step down today after five years in the role, said liquor and hardware had at least performed strongly.