Metcash books lower earnings as cost of doing business rises

Metcash delivered lower earnings despite higher sales in the last fiscal year, reflecting an increase in cost of doing business particularly in the hardware segment.

The group’s statutory profit after tax slid 0.7 per cent to $257.2 million while revenue rose 0.7 per cent to $15.9 billion in the year ended April 30.

Its food sales were up 4.6 per cent with strong growth in both Supermarkets and Campbells and Convenience. However, tobacco sales fell 13.9 per cent due to rampant illicit trade and the shift to alternatives.

Food earnings before interest and tax (EBIT) also increased 3.0 per cent to $210.1 million.

Similarly, liquor sales grew 1.7 per cent to $5.2 billion with EBIT rising 4.9 per cent to $109.2 million.

While hardware sales climbed 2.7 per cent to $3.5 billion, its EBIT decreased 3.8 per cent to $210.9 million due to a significant increase in regulatory costs primarily in Victoria, higher labour and occupancy costs, and other cost inflation.

“The acquisition of Superior Foods was completed earlier this month and will result in the further strengthening of our food business. It also opens up new growth opportunities in the attractive and adjacent food services market,” said Doug Jones, Metcash CEO.

“While in hardware, the acquisitions of Alpine Truss and Bianco Construction Supplies accelerates our ‘whole of house’ strategy and further strengthens the business’ market position.”

Group sales in the first seven weeks of the current fiscal year, including two weeks of Superior Foods sales, rose 2.2 per cent.

Metcash’s businesses include IGA, Foodland, Campbells/C-Store, Cellarbrations, IGA Liquor, The Bottle-O, Mitre 10, Home Hardware, Total Tools, and Hardings Hardware.

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