Metcash (ASX:MTS), the leading wholesaler and service provider to independent retailers in Australia, has reported its financial results for the first half of FY25, ending 31 October 2024. The company’s diversified portfolio strategy continued to deliver growth in revenue but faced challenges in specific segments.
Key financial performance
Metcash reported a 6.3% increase in group revenue, reaching $9.6bn. Excluding charge-through sales, revenue grew by 8.1% to $8.5bn.
Despite strong sales performance, underlying EBIT was flat at $246.1m, reflecting the mixed dynamics across its three core pillars: food, liquor, and hardware. Statutory profit after tax edged up by 0.6% to $141.8m, while underlying profit after tax declined by 5.5% to $134.6m.
Underlying earnings per share (EPS) was 12.3 cents, down from 14.7 cents in the same period last year.
The company declared an interim dividend of 8.5 cents per share, fully franked, aligning with its payout ratio of approximately 70% of underlying profit after tax.
Segment performance
The food pillar delivered robust results, with sales increasing 18.8% to $4.2bn (excluding tobacco). This growth was supported by the acquisition of Superior Foods in June 2024, which added $554.8m in revenue. Earnings from the food segment grew by 17.9% to $119.9m, benefiting from strong trading performance across supermarkets, Campbells & Convenience, and the integration of Superior Foods.
Liquor also demonstrated resilience, achieving 2.1% growth in sales to $2.5bn. Independent retailers continued to outperform chain stores, driven by tailored and localised offerings. However, liquor EBIT slightly declined to $49.1m, impacted by reduced strategic buying and rising costs.
In contrast, the hardware segment faced headwinds due to a steep decline in trade activity. Total hardware sales increased by 2.5% to $1.8bn, boosted by acquisitions and new store openings. However, like-for-like sales fell by 5.6%, and EBIT for the segment dropped by 15.1% to $93.9m due to cost pressures and intense competition in the professional tools market.
Outlook
Group CEO Doug Jones expressed confidence in Metcash’s ability to navigate current challenges, stating, “Our diversified portfolio strategy continues to deliver in the face of a challenging external environment."
Metcash aims to sustain growth in the food and liquor pillars while implementing aggressive cost-management initiatives in hardware. The company’s new mega distribution centre in Victoria, operational since mid-2024, is expected to enhance efficiency and support future growth.
Shares in Metcash are trading 3.37% higher at $3.23.
