Mixed results at Metcash

Loss after 7-Eleven contract hit but sales rising

METCASH has posted a fullyear loss of $56.8 million after taking a non-cash impairment charge against goodwill and other assets following the loss of its 7-Eleven supply contract.

The IGA supermarket supplier’s sales revenue for the 12 months to April 30 rose 2.9 per cent to $13.03 billion, led by sales growth in the food and liquor segments, although this was partly offset by a decline in hardware.

“I am pleased to report very admirable results in a year of unprecedented challenges that included the impact of devastating bushfires and the COVID-19 pandemic,” group chief executive Jeff Adams ( pictured) said.

Supermarket food sales increased 3.8 per cent to $7.5 billion. The group benefited from extraordinary demand levels in the food segment in March and April amid panic buying during coronavirus-related restrictions, but said total sales even before this period had increased 0.2 per cent.

Total liquor sales increased 0.3 per cent to $3.68 billion, despite being adversely affected by COVID-19 restrictions in

March and April due to the closure of customers’ “onpremise” businesses in Australia and New Zealand.

Hardware sales decreased 1.3 per cent to $2.08 billion, reflecting the impact of the slowdown in construction activity on trade sales and the loss of a large customer in the first half.

The company said there was a significant improvement in second-half sales, buoyed by the positive impact of COVID-19 restrictions in DIY categories, and garden.

The sales growth comes despite the loss of the 7-Eleven supply contract, worth an estimated $800 million in sales annually, during the first half. The company had announced a $237.4 million non-cash impairment against goodwill and other assets as a result.

The company will pay a fully franked final dividend of 6.5 cents a share. Metcash said sales in the first seven weeks of particularly paint

FY21 had continued to benefit from a change in consumer behaviour. Food sales are up 9.3 per cent, with supermarket wholesale sales excluding tobacco up 16.7 per cent.

The earnings benefit from the increase in sales continues to be marginally offset by higher costs to service the elevated demand and manage health and safety risks, it said.

Liquor sales have increased 5.5 per cent for the same period, while hardware sales are up 9.4 per cent, underpinned by continuing strong demand in DIY categories.