Metcash reports 3 per cent drop in underlying profit

Australian grocery wholesaler Metcash has reported a 3.0 per cent drop in underlying profit for the full-year to $210.3 million, as food earnings took a hit.

Group revenue climbed 1.8 per cent to $12.66 billion but earnings fell 1.4 per cent to $330 million as growth in liquor and hardware struggled to offset a 3.0 per cent drop in grocery earnings.

Total liquor sales increased 5.6 per cent to $3.67 billion and while
total food sales increased by 0.3 per cent to $8.79 billion, a decline in wholesale sales and investment in growth initiatives resulted in food earnings falling to $182.7 million.

Full-year net profit stood at $192.8 million, compared to a $150 million loss in the previous financial year.

Group CEO Jeff Adams was optimistic about the progress on key initiatives in the second half which helped deliver “a pleasing financial and strategic outcome for the year”.

“Solid earnings and cashflows were again delivered by our Pillars despite challenging market conditions, and we continue to be well positioned with a strong balance sheet,” Adams said in a statement to the ASX on Monday.

“Pleasingly, our Supermarkets business delivered its fourth consecutive half-year period of improvement in the non-tobacco sales trajectory, and it has a number of significant MFuture initiatives underway that we believe will drive further improvement.”

Poor trading in Western Australia hindered supermarket sales which fell 0.5 per cent to $7.24 billion.

Earlier this month Metcash announced a new long-term supply agreement with Drakes Supermarkets in Queensland.

Drakes has more than 50 stores in South Australia and Queensland and the account is worth around $270 million to Metcash annually.

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