Kalkine: Metcash (ASX:MTS) Surges on Hardware Business Consolidation and ASX200 Strength

June 11, 2025 02:10 PM AEST | By Team Kalkine Media

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Kalkine: Metcash (ASX:MTS) Surges on Hardware Business Consolidation and ASX200 Strength — Image source: shutterstock

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Highlights

Metcash gains amid hardware segment consolidation

Earnings set to surpass prior expectations

Confidence bolstered across ASX200-linked outlook

Metcash Ltd (ASX:MTS) shares rallied midweek following the company’s announcement of a strategic move to consolidate its hardware operations. This consolidation involves merging its Total Tools business with the Independent Hardware Group, creating a more unified and potentially more efficient retail and trade tools network.

At 11:27am AEST on Wednesday, Metcash shares were trading 3.9% higher at $3.64, indicating a positive market reaction to the announcement and the company’s financial outlook. The move has drawn increased attention from market analysts, who point to the potential of this merger to unlock medium- to long-term benefits despite current market challenges.

Metcash stated that unaudited figures suggest the FY25 earnings before interest and tax (EBIT) for its hardware segment are tracking ahead of expectations. This upbeat outlook has added momentum to investor sentiment, especially as the company continues navigating a competitive retail landscape.

A key aspect of this development is its relevance to investors interested in ASX dividend stocks. With consistent income generation being a central strategy for many portfolio holders, the anticipated profitability of Metcash’s hardware business could reinforce its attractiveness on that front.

Analyst commentary reflects both optimism and caution. While some upgraded their outlook on Metcash, citing the strategic rationale of the merger, others noted challenges such as increased price competition and macroeconomic headwinds. A slight reduction in one analyst’s target price, from $4.10 to $4.00, was attributed to softness in the hardware and liquor earnings outlooks. They also acknowledged risks tied to market share fluctuations and the ongoing housing sector slowdown.

An additional factor was the departure of the Total Tools CEO, Richard Murray, which was noted as a potential gap in leadership during this transformative phase. However, the broader consensus leaned towards the consolidation being a prudent strategic step, especially as the company aims to reinforce its positioning across key business segments.

This development aligns Metcash with stronger momentum seen within the ASX200, where several consumer-facing and retail-focused companies have demonstrated resilience. As the company continues to sharpen its operational focus, its progress will remain a point of interest across Australia's equity landscape.

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