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Highlights
- Metcash (MTS) shows mixed performance across its core segments for the first half of FY25.
- Food and liquor segments drive revenue growth despite hardware challenges.
- New distribution centre in Victoria positions Metcash for operational efficiency.
Metcash (ASX:MTS), a major wholesaler and service provider supporting independent retailers across Australia, has released its financial results for the first half of FY25, ending October 31, 2024. While the company’s diversified portfolio has driven revenue growth, the performance of its hardware division highlights significant challenges.
Financial Overview
Metcash achieved group revenue growth of 6.3%, totaling $9.6 billion. Excluding charge-through sales, revenue rose by 8.1%, reaching $8.5 billion. However, underlying earnings before interest and tax (EBIT) remained flat at $246.1 million due to mixed results across the company's core segments: food, liquor, and hardware.
Net profit after tax slightly increased by 0.6% to $141.8 million, while underlying profit after tax declined by 5.5% to $134.6 million. Underlying earnings per share (EPS) were reported at 12.3 cents, down from 14.7 cents in the prior corresponding period. The company declared a fully franked interim dividend of 8.5 cents per share, adhering to its payout policy of approximately 70% of underlying profit after tax.
Segment Highlights
The food division emerged as a key driver of growth, with revenue climbing 18.8% to $4.2 billion, excluding tobacco sales. This was bolstered by the integration of Superior Foods, acquired in June 2024, which added $554.8 million in revenue. Segment earnings rose by 17.9% to $119.9 million, benefiting from strong trading results across supermarkets and convenience channels.
Liquor sales showed resilience, growing by 2.1% to $2.5 billion. Independent retailers outpaced larger chains by catering to local market preferences. However, liquor EBIT dipped to $49.1 million, impacted by reduced strategic buying opportunities and increasing costs.
The hardware division faced significant headwinds due to declining trade activity and heightened competition in the professional tools segment. Despite a 2.5% increase in total sales to $1.8 billion, like-for-like sales dropped 5.6%, and segment EBIT fell 15.1% to $93.9 million.
Metcash’s new mega distribution centre in Victoria, operational since mid-2024, aims to improve operational efficiency and support growth across its core segments. Group CEO Doug Jones reaffirmed the company's commitment to its diversified portfolio strategy while highlighting initiatives to manage costs in the hardware division.
As Metcash navigates external pressures, its focus remains on leveraging its strengths in food and liquor while mitigating challenges in the hardware sector.
