Improving outlook helps boost Metcash shares
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More news: Shares in Metcash are up 2.2% to $3.19 after the wholesaler and IGA supermarkets supplier reported a steady first-half profit. It posted increases in food and liquor earnings but these were offset by weaker trading activity in the hardware segment.
E&P’s retail analyst Phillip Kimber said the result was in-line with expectations, given Metcash had flagged the margin pressure in October.
What they said: "Outlook comments and recent trading show improvement in hardware and liquor — but moderation in food. Overall, we expect minimal change to VA [Visible Alpha] consensus expectations. Given the weak share price over the past month we expect MTS share price to be supported following the FY25 result," he said in a note.
Metcash first-half profit flat as hardware margins weigh
The news: Wholesaler Metcash has posted a steady first-half profit as increases in food and liquor earnings were offset by weaker trading activity in the hardware segment.
The numbers: Net profit for the six months to 31 October was up 0.6% to $141.8 million, while underlying profit was down 5.5% from a year ago to $134.6, near the top end of the company’s guidance.
Group sales revenue rose 8.1% to $8.47 billion and the company will pay an interim dividend of 7.5 cents a share, down from 11 cents a share a year ago.
The context: Metcash, which supplies the IGA supermarkets network as well as other independent retailers, said food segment earnings jumped 17.9% to $119.9 million, reflecting growth in both supermarkets and Campbells and convenience chains as well as the addition of Superior Foods.
The liquor business was also steady, with earnings down slightly reflecting the impact of reduced strategic buying.
However, hardware earnings slid 15.1% to $93.9 million on the back of weaker trade activity, increased cost pressures and intense price competition in the professional tools market during the first quarter. Metcash had flagged the margin pressure in October.
The group said overall sales for the first four weeks of the second half increased 8%, led by the food segment. Soft trade activity continues to place pressure on volumes and retail store margins in its hardware arm, and the company is focused on costs and accelerating growth initiatives in the IHG business, which is expected to provide earnings benefits in the second half.
The source: ASX announcement
