Metcash Limited’s Shares Up Over 4.8% on ASX – A Quick Look

Australia’s leading wholesale distribution and marketing company, Metcash Limited’s (ASX: MTS) shares climbed up by 4.869% today (5 March 2019), owing to positive market sentiment over the improved outlook for Australian Supermarket.

Metcash Limited recently provided a strategy update in which the company informed about the societal, competitive and technological forces which are driving the global grocery trends. The company also informed about transforming its retail network by having a clear proposition for shoppers. Metcash is planning to increase shopper focus by delivering channel clarity to meet shopper trends. Further, to accelerate the growth of its stores, the company is also willing to support investment in stores. In the next five years, the company is planning to invest ~$300 million in its business which will include ~$165 million in Food segment, ~$90 million in hardware segment, ~$15 million in Liquor segment and ~$30 million in restructuring costs.

The company’s 5-year vision is to deliver a pathway to long term sustainable growth by improving its competitiveness for its retailer networks and creating a sustainable cost base through a continued focus on simplification and efficiencies.

With stabilized earnings through its cost out programs, the company is currently focusing on revenue growth and cost efficiencies. The company’s retail footprint currently constitutes around 1,668 supermarket retail stores, 2,735 liquor retail outlets and 682 hardware retail stores.

In the half-year results for FY 2019, the company reported EBIT of $158.1 million which was 1.2% higher than the previous corresponding period (pcp). In the half-year period, Food EBIT and Hardware EBIT increased by 2.4% and 34%, respectively, while the Liquor EBIT declined 1.0% to $29.1 million. For the half-year period, the company reported Underlying profit after tax of $100.3 million which is 1.2% higher than pcp.

Due to highly competitive market conditions, the total sales in the supermarket segment remained broadly flat at $3.57 billion during the half year period. In convenience segment, the total sales increased by 5.4% to $762.9 million. In Liquor segment, the total sales during the same period increased by 6.7% to $1.75 billion, driven by the continued growth in ALM wholesale business with the addition of large contract customers.

Now, let’s have a glance at the company’s stock performance and the return it has posted over the past few months. The stock is trading at a price of $2.800 with a market capitalization of ~$2.43 billion as on 5 March 2019 (AEST 4:00 PM). The counter opened the day at $2.650 and reached the day’s high of $2.845 and touched a day’s low of $2.630 with a daily volume of 8,435,975. The stock has provided a year till date return of 12.18% & also posted returns of -3.96%, 9.43% & 7.66% over the past six months, three & one-months period respectively. It had a 52-week high price of $3.730 and touched 52 weeks low of $2.250, with an average volume of ~ 3,798,063.


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